Those in the ARM industry who think that the change in leadership at the Consumer Financial Protection Bureau is the first step in spending less time and money on compliance are likely to be surprised that life is not likely to get any easier, according to a panel of lawyers who spoke last week on a webinar about how the changes at the agency are impacting the collections business.
A first glance at Richard Cordray’s resignation as director of the CFPB would indicate that a Republican replacement would be less aggressive on the regulatory front and that may still be the case, but only time will tell if that will actually happen, the panelists said.
A recording of the webinar can be accessed here.
If the CFPB appears to step back on its regulatory or enforcement initiatives, expect the states to ramp up their supervisory and investigatory efforts, Needleman said.
“Don’t ignore the states,” she said during the webinar. “There are a lot of aggressive attorneys general who have learned a lot from the CFPB. There is an army of people ready to take the CFPB’s place.”
If, as many expect, the CFPB delays or abandons its proposed debt collection rule, the industry may not be better off as the industry thinks it might be, the panelists said. Needleman pointed out that the industry has not seen a major federal rule enacted since the Fair Debt Collection Practices Act was passed more than four decades ago. There is also a consensus that the number of lawsuits filed by consumer attorneys will continue to increase without new rules to help codify what is allowed and what is not.
“It is foolish and inviting trouble if you think it’s going to be a return to 10 years ago,” Willis said, referring to the time before the CFPB came into existence. Collection agencies “need to pay attention to consumer issues” and Unfair, Deceptive, or Abusive Acts & Practices (UDAAP).
Wortman, joking that he didn’t think that consumer attorneys could file any more lawsuits than they have, said that the number will continue rising absent some regulation or law that curbs the practice.
Willis noted the timing of the Cordray’s resignation will ensure that whomever President Trump nominates as a permanent replacement will cross into the next administration after the 2020 Presidential election. Which could make the ruling in the case of PHH v. CFPB more interesting, since the Republicans had been arguing in favor of allowing the president to fire the director of the CFPB for any reason. That may no longer be the case.
The industry needs to stand up and recognize that this is an opportunity for itself to walk into the offices of the CFPB and attempt to negotiate a rule that they would not be able to get had Cordray not resigned, Needleman said.
“If the CFPB is not moving forward with a rule, the industry should go into the CFPB and make suggestions about what kind of rule they want. You don’t normally see this type of disruption at a federal agency. It’s time to get a wish list together and get rules that make sense.”