Having launched just one year ago, the Consumer Financial Protection Bureau is still in the early stages of its mission to improve the environment for consumers using the nation’s financial system—mortgages, credit cards or any other financial product. The bureau’s responsibilities include rule-making and enforcement of consumer financial protection laws under the CFPB’s jurisdiction, including those governing the collection industry.
On July 19, CFPB Assistant Director of Nonbank Supervision Peggy Twohig addressed attendees at the ACA Convention, providing insight into the bureau’s direction.
As supervision of nonbank entities, including collection agencies, ramps up, the first step will be defining industry members considered large participants. The CFPB proposed the threshold for the collection industry but is still considering comments before finalizing the definition this fall. Supervision of companies meeting that threshold will then begin.
Twohig said she expects supervisory practices of nonbanks to mimic those of banks.
“One of our goals is to implement a consistent approach,” she said.
The bureau strives to fully understand the markets it oversees and take a transparent approach to supervision. The bureau will make examination guidelines and procedures available on the CFPB website.
Examinations are intended review company practices for compliance with federal laws, such as the Fair Debt Collection Practices Act and Fair Credit Reporting Act. The process will usually consist of a request for initial information and an on-site visit, which may include speaking with managers, transaction testing and listening to calls.
Twohig said the bureau wants to see how companies approach compliance management, demonstrating robust compliance standards and systems. Examination audits will result in a confidential report and rating. The bureau will also work with companies to help them strengthen their systems if deficiencies are identified. Not all deficiencies will result in enforcement actions.