In her keynote address at the insideARM Large Market Participant Summit Thursday, Linda Gallagher, Managing Director and Global Head of the Consumer Protection Practice at Promontory Financial Group, said the rush towards compliance in the debt collection industry is the fastest she’s seen in her 30 years in the financial services sector. As the industry moves at a breakneck new pace to keep up with the Consumer Financial Protection Bureau and new regulations, the key elements to look out for in building an effective compliance management system (CMS) are governance and the substantive components of the CMS. There’s a big difference between consumer protection and consumer compliance.
When developing a CMS, create a top-down framework for building accountability. Gallagher stressed how this framework must include board members and agency employees with business acumen.
“I fear that when there’s meetings with boards and training of boards, it’s very technical and they’re not going to get in to those details because it’s painful,” Gallagher said. “Give them context so they’d understand: it’s not just you, it’s everyone.”
When it comes to the substance of compliance, the CFPB has a multi-modular exam manual that explicitly states what they look for at a debt collection firm. But Gallagher says that even the CFPB’s manual is incomplete and doesn’t cover all of what she sees as the six “sticking points” for compliance: learning from customer complaints, assessing risks, testing compliance performance, driving sustainable change, developing compliance expertise and independent audit oversight.
“There is a war for talent in the compliance space today; the compensation norms for compliance talent have just gone crazy,” Gallagher said. “It’s that much harder to get compliance talent in your audit function. It’s a step removed.”
Finally, smart strategies in areas that support your CMS are critical to giving comfort to your business partners and regulators. Creditors and regulators want to know that collectors base their actions in the marketplace on compliance with applicable laws, and that they can prove it.
The insideARM Large Market Participant Summit – generously underwritten by FICO, Interactive Intelligence, and RevSpring — is running through Friday. Check back on insideARM.com for updates throughout today and tomorrow and follow us on Twitter under the hashtag #iasummit2014.