Debt has hit the United States and its consumers hard. By the end of 2018, outstanding consumer debt is expected to reach an all-time crushing record of $4 trillion. Each year, consumers in the United States are paying more than a quarter of their income just to paying down debts. An overinflated real estate market and inconsistency in the market have let to this situation and prompted movement on the part of the federal government.
The Consumer Financial Protection Bureau Compliance, or CFPB, is the agency primarily dedicated to protecting consumers and standing up for their rights in any financial transactions, particularly with entities far more powerful and wealthy than the individual, such as a bank. And while the CFPB does focus on banks and lending institutions, it does have broad scope to oversee all kinds of transactions involving a great variety of companies. The CFPB even has oversight when it comes to retail billing software, debt collection software, and bill collection software and how they are used. Having a workable CFPB compliance management system is crucial because failure to remain in compliance can incur enormous penalties and fines. Here are five ways to stay in compliance as you manage your dynamic recovery services or other collection solutions:
Understand Who a “Service Provider” Really Is
The definition of financial products and services has exploded since the CFPB was first created. It now covers anyone who provides a financial product or service, which includes any type of payment processing, debt collection, credit extension, or distribution of stored value or payment instruments. This means it’s not just banks and credit card companies that fall under CFPB oversite, but subscription services, too. It also means that those who provide such services on behalf of third party vendors are responsible for those vendors’ actions in respect to the consumer.
Put the Voice of Consumers First
A CFPB compliance management system and plan starts with listening to consumers. It’s important to work with other vendors and partners who are ethical and honest and who are invested in developing long-term profitability and customer relationships. It is worthwhile to search for partners and vendors who share the same values when it comes to handling complaints and providing customers with a good experience.
Inspect and Exercise Oversight
The best way to avoid issues with CFPB compliance is to avoid those issues in the first place. A great way to do that is to conduct regular inspections and have a robust CFPB compliance management system in place. It’s important to verify that all vendors and partners also understand how to remain CFPB compliant and have the facilities and CFPB compliance management system in place to do so. This also means proactive steps to establish monitoring and internal controls and to act quickly when problems arise. Periodically, vendors and partners should be evaluated to ensure that risks to do not outweigh their value.
Establish a Culture of Proactive Internal Auditing for Compliance
Third party evaluators should be called in regularly to keep everyone on task in this regard, but internal audits should also be happening regularly. It is crucial to evaluate all policies, systems, and controls to make sure that compliance is manageable and effective strategies can be developed and maintained.
Change the Culture of the Organization
Unlike acquiring CFPB compliance management system software or running internal audits, this is a more abstract process that takes time to accomplish. The goal is to become a customer-focused organization. This focus and resulting policy and action shifts that will naturally arise from it will help with compliance in a native way. This can be done by leveraging insights gathered from complaints and concerns and using these as a springboard for more effective employee training and management design.
Compliance with the CFPB is more than just a way to avoid fines and penalities. It’s also an effective strategy for growth. Customer-focused businesses retain customer loyalty and increase their brand reputation. As compliance and customer satisfaction boost one company, others that ignore consumer issues and de-prioritize compliance suffer for it and become less competitive. In the end, there is every reason to develop or source an effective CFPB compliance management system and reap the benefits of becoming a customer-focused enterprise.