The regulatory-driven approach of the US market provides issuers with a clearly defined set of regulations that must be followed; these are then rigorously enforced with severe consequences for failures, as exemplified through a number of recent high-profile cases. This approach has resulted in issuers being solely focused on meeting current requirements; they then await the next wave of regulations and respond accordingly. As such, the compliance agenda tends to be driven by the regulators, with issuers facing challenges in keeping up with ever-increasing requirements.
In a world of pro-activity regulators provide guidelines which issuers then interpret and adhere to. Although this may appear to provide less clarity and room for uncertainty, when applied correctly, this model results in issuers building an ingrained approach to ensuring the fair treatment of their customers rather than just meeting requirements. The key benefit for creditors is that they no longer need to react to growing regulation; instead they define it through their actions.
How do creditors become pro-active, by responding to, and having their own interpretation of, guidelines, rather than awaiting the regulators to impose changes. In our world of late stage collections this means reacting to growing guidelines around the management of third party debt suppliers, and utilizing the techniques we developed over the past 10 years to monitor performance, such as detailed monitoring and exception management, to now monitor compliance. Further to this, we can develop audit and compliance activity by focussing on policy and processes to ensure that these are being followed through account level auditing.
With this approach to compliance the industry can work with regulators to understand the pro-active ‘apple’ required to keep the ‘doctor’ away, this in turn will help to define future regulation and ensure that issuers are well positioned to meet future requirements.