The financial crash in 2008 was no fun for anyone, which of course prompted public outrage that America’s financial institutions should be held more accountable.
The outrage begat the Dodd-Frank Wall Street Reform and Consumer Protection Act, the strongest financial reform legislation since the great depression according to Forbes. This act begat a consumer protection bureau to oversee banks on mortgage lending and credit card practices, which begat lots of concern since then over who would be overseen and exactly how.
Well, now we know that big debt collectors fall under the list of those supervised by the new monitoring agency created by the act, the Consumer Financial Protection Bureau (CFPB).
Recently the CFPB released its final ruling that defines larger participants of the consumer debt collection market for purposes of being “supervised.”
The CFPB monitors banks, credit cards, credit reporting, residential mortgages, private education loans, and payday loans — and debt collectors, according to the new final ruling.
The CFPB only plans to monitor the largest debt collectors, however.
The new ruling means that 175 of the roughly 4,500 companies that meet the official debt collector definition will now be subject to supervision, according to a Forbes article published earlier this week.
In this case supervision, the article notes, means that the 175 firms will now have an initial conference between CFPB examiners and company management, a review of the firm’s compliance systems, an on-site investigation that likely will include management and record handover, and issuance of confidential examination reports, supervisory letters and compliance ratings.
Forbes, at least, takes issue with the decision to only target the largest debt collectors at this point.
“You’ve got to start somewhere, and clearly the new government agency doesn’t have the resources to do an in-depth investigation of 4,500 companies,” wrote Stephanie Eidelman for Forbes. “Nobody is saying that these firms shouldn’t be regulated.”
“However,” she added, “what you’ve got here are those companies that are most likely to be following the rules.”
Eidelman noted that due to their size, the largest firms tend to work predominantly with the largest creditors. These creditors tend to have the most rigorous vetting and compliance requirements, making them less likely to make big mistakes or fly under the radar the way little debt collectors can.
“So this Final Rule by the CFPB is likely an important piece of the pie, but it only addresses a slice or two. The majority of that pie is still out there – and is really hard to identify,” she noted.
Edited by Rich Steeves