Industry Experts Make Predictions for Biden Administration’s Impact on ARM Industry

A new president will take office today, and whether you are happy or sad about that, it likely will mean changes are coming for the accounts receivable management industry. To paint a picture of what changes might be on the horizon, reached out to a number of industry veterans and asked them to share one prediction for the ARM industry that they think will happen during the Biden administration. While one participant likened the request to asking how things will go in a neighborhood on the day that someone new moves in, here is what those veterans had to say:

John Bedard, Bedard Law Group

Industry is going to experience an increase in regulatory scrutiny. Industry can prepare for this scrutiny by remaining informed – studying everything the CFPB publishes and conforming behavior to the Bureau’s expectations. The industry’s paramount obligation will be to vigorously challenge government overreach. Regulation by enforcement must not be allowed. Unlawful legislation and regulatory enforcement behavior must be challenged in court else individual liberties and fundamental rights will continue to erode.

Jeff Freedman, MRS BPO

Simply put, I believe it is highly likely that we will see a return to much more aggressive action through enforcement by the CFPB, similar to what was seen during the Obama Administration. Even the more moderate Democrats did not like what they perceived as a laissez-faire approach by the current CFPB as compared to its predecessor so the ARM industry should likely prepare for the pendulum to swing in the opposite direction once again.

Stefanie Jackman, Ballard Spahr

I think the Biden administration and new Congress may reconsider whether to ban mandatory arbitration in consumer credit agreements. Recall that the Cordray CFPB had promulgated a rule banning mandatory arbitration in such agreements that was subject to a CRA effort with Vice President Pence casting the deciding vote against enacting the rule. I would not be surprised to see legislation or other efforts in Congress to put this back in play as part of larger consumer protection efforts and initiatives.

Michael Lamm, Corporate Advisory Solutions

My one prediction is that being that our country has so many “fires” to put out from Covid-19 to the political divisions that exist, I don’t see any major regulatory shifts in 2021, however, I think we will start seeing more liberal views surrounding consumer protection beginning to take shape in 2022.

Our industry needs to avoid the thought process that the “world is coming to an end” and begin to go on the offensive and develop a working relationship with the “new guard” that is brought into the CFPB. If a proactive, collaborative approach takes shape this year it could help to curtail significant regulatory changes that will negatively impact the industry overall in 2022 and beyond.

Joann Needleman, Clark Hill

With the nomination of Rohit Chopra to lead the CFPB and Gary Gensler to lead the SEC, President Biden has put into place formidable regulators who are committed to consumer protection. The pieces seem to be falling into place for a more aggressive slant to financial services and financial services regulations and for that reason, I predict that the ARM industry will see an increase in supervision and enforcement. It will be interesting to see who Biden nominates to lead the OCC to round out the trio. However, I do think predict that debt collection will take a back seat to credit reporting and fair lending as top priorities in terms of potential rulemaking and policy changes. I am not sure how easy it will be for the debt collection rules to change. If Mr. Chopra wants to support his markets team, who worked for six (6) years to develop the rules, then he will be less inclined to pull-back substantive sections prior to its implementation. Industry will need to pay attention to ensure that the core elements of the rule, like the use of email and text, remain intact.

Manny Newburger, Barron & Newburger

CFPB enforcement under the Trump Administration has reached a five-year high. While I certainly do not expect less enforcement under the new administration, the ARM industry has had no opportunity to relax its vigilance. My hope is that the maintenance of strong compliance standards means that there will be no reason for a sudden surge of enforcement against the ARM sector. Nevertheless, the experience and public comments of the newly-nominated CFPB Director suggests that one of the likely places for stepped-up enforcement may be in the student loan space. I also would expect an effort to roll out first-party debt collection rules.

Rick Perr, Kaufman Dolowich & Voluck

My prediction for the ARM Industry during the Biden Administration is that it will be challenging. Even with the recently released CFPB Rule, there is little question that regulatory oversight over the past four years was less than during the Obama Administration. There were generally fewer examinations, enforcement actions and efforts to largely expand the scope of oversight. The Executive branch can be expected to try and make up for lost time by aggressively pursuing more left-leaning policies. While the Biden Administration will have to be more moderate in the legislative arena due to the small majority in the House and the equally split Senate, agencies such as the CFPB, the FTC and even the FCC will be very active. The judiciary may be a resource for the ARM Industry in the foreseeable future as recently appointed conservative judges will be the check to overreach by executive branch functionaries.

Jan Stieger, RMA International

Above all, I think the US and specifically the financial services sector is in for a wild ride in the next year as the nation sorts through major issues and grapples with what it means to be a democracy. Related to the ARM industry, I predict that the recently released debt collection rule (both parts) will be reviewed by the new CFPB administration and parts of it will be changed before the rule becomes effective in November, 2021. Even though it qualifies, I do not believe the rule will be subject to the Congressional Review Act.

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