Welcome to the Research Assistant Weekly Newsletter - a subscriber-only resource for insight into emerging compliance challenges, details on peer calls, and links to new Research Assistant reports, documents, tools, and more.
During this week’s Research Assistant Peer Call, a member sparked an engaging conversation about the oversight responsibilities of creditors who have sold their defaulted debt. Missy and Sara, drawing from their diverse experiences in the field, shed light on varying oversight approaches, ranging from ultra-extreme to less invasive structures. We also discussed how these structures affect agencies handling debt buyer portfolios.
A standout moment from our discussion was when a member stated, “A creditor may sell its financial interests, but it cannot sell the compliance and risk management of the portfolio.” This statement underscores the crucial role of due diligence and ongoing oversight in ensuring compliance with consumer financial laws. It is a reminder of the responsibility that remains with creditors even after selling their interests.
The Creditor to Debt Buyer Oversight Program – What to Expect
Debt Buyers should expect that a creditor is going to want to thoroughly vet all compliance, operational, and data security policies, procedures, and controls as part of their due diligence process. This will also typically conclude with an onsite visit which will conclude with a report and approval/denial to make the debt buyer an “approved buyer.”
Then there are scheduled and unscheduled check-ins periodically that include evidence of how their accounts are being collected compliantly. Debt buyers should expect to share compliance reports, monitoring, and auditing results. Often, they will request to listen to collector calls where their accounts were contacted.
For collections agencies and law firms this is when you will hear about creditor expectations from your debt buyer clients. Creditors typically look for different issues they consider reputation risk items in calls. How a collector pronounces their name, or if the language used in the opening statement is confusing to the consumer, etc.
There are a lot of resources to help guide creditors, debt buyers, and third parties through this oversight. Here are few we discussed during our call on Monday:
As highlighted by one member, when a debt buyer encounters a seller lacking robust due diligence and oversight procedures for debt sales, it raises concerns about the credibility of that seller as a potential creditor to transact with.
Documents and Crowdsourced Materials:
Top Reads:
Upcoming Webinars/ Other Announcements:
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