How to Build Trusted Creditor-Collector Relationships (and Better Market Your Agency)

When the CFPB introduced Reg F in late 2020, a lot of attention focused on the change in collector-debtor communication practices. A less discussed, but equally significant change is the increased oversight responsibilities creditors have when outsourcing collections. With the CFPB’s announcement about extending its supervisory authority to non-bank financial institutions, vendor management and auditing is increasingly becoming a priority for originators and lenders. As a result, for collection agencies, robust compliance management and reporting capabilities now represent a competitive advantage when marketing their services to creditors.  

For creditors and collectors alike,  Reg F oversight requirements create a new reality of shared compliance responsibility. In this post we discuss how servicers and creditors can better collaborate by using new tools that provide all parties with critical insights and generate the transparency and trust needed to succeed in a tightening regulatory climate. With the help of these tools, servicers can function as trusted compliance partners for creditors, instead of potential high-risk liabilities. They can also help growing ARM businesses minimize risk when contracting with 3rd parties.  

Reg F transforms the creditor-collection agency relationship equation by requiring close cooperation on compliance issues. But it also raises legitimate concerns about increased workload and financial burdens. For collections agencies, adding staff to extract data and compile reports might be near-impossible in times of declining ARM industry profits. Likewise, for creditors, the new oversight responsibilities also require increased documentation and audits that are resource-intensive.