The debt collection industry is constantly evolving, and the current trend is all about compliance. Because at The National List we know it is key to continually keep up with the changes in the industry, in May I participated in a webinar on Compliance Management Systems (CMS), sponsored by KirkpatrickPrice, a data security company that provides regulatory compliance, security testing, internal auditing, risk assessment and IT advisory services.
At NL, our role and our objective is to keep our clients and attorney members informed. Each and every compliance standard directly affects you and every other debt collection professional. Compliance requirements are not “coming.” They are here! Therefore, I’m sharing with you some of what I learned about how it is key to have a system in place to assist in the management and implementation of compliant processes within your organization.
What is the CFPB?
As of January 2, 2013, the Consumer Finance Protection Bureau (CFPB) put into effect new regulations and standards that apply to all entities involved in debt collection. We encourage you to become familiar with them, if you aren’t already. Many of these regulations have the same purpose as laws you are already familiar with and are following to ensure your compliance. They include the FDCPA, the FCRA, the GLBA, the EFTA, and the ECOA.
The CFPB states on its website: “We are working to make regulations and guidance as clear and streamlined as possible so providers of consumer financial products and services can follow the rules on their own.” That’s where a CMS comes in. One of the most important responsibilities of the CFPB supervisory program is assessing the quality of the CMS employed by the financial institutions under their jurisdiction.
What is a CMS?
The CFPB Supervision and Examination Manual-v 2.0, Pg. 35, states: “A compliance management system is how a supervised entity:
- Establishes its compliance responsibilities;
- Communicates those responsibilities to employees;
- Ensures that responsibilities for meeting legal requirements and internal policies are incorporated into business processes;
- Reviews operations to ensure responsibilities are carried out and legal requirements are met; and
- Takes corrective action and updates tools, systems, and materials as necessary.”
KirkpatrickPrice defines a CMS as “a set of interrelated or interacting elements that organizations use to direct and control how compliance policies are implemented and compliance objectives are achieved.”
What should be the core components of your CMS?
The CFPB states that, “An effective compliance management system commonly has four interdependent control components:
- Board and management oversight;
- Compliance program;
- Response to consumer complaints; and
- Compliance audit.”
Your CMS should help you create an Action Plan that will identify areas of non-compliance and take corrective action. An effective Action Plan includes:
- Written Corrective Actions
- Written Preventative Actions
- Documented follow-up with timelines and completion dates
One of the most important aspects of managing a legal network is ensuring compliance. NL offers a Compliance Program that provides businesses with the information they need to ensure the law firms in their legal network are in compliance with their work and ethical standards, terms and conditions, insurance requirements and more.
If you would like to know more about how the NL Compliance Program can help your collection-related business, contact Kaitlyn Stangeland, NL Compliance Coordinator, 800.227.1675, ext. 101.
By Kacey Rask, NL Account Executive