1. Regulatory requirements will continue to grow
Ok, so maybe I didn’t need the crystal ball for this prediction but this is of huge importance, the regulatory challenges of 2013 are not disappearing, they will continue to grow. The recently published ANPR (Advanced Notice of Proposed Rule-making) by the CFPB demonstrates that the regulators are looking to make significant changes to industry regulations and that creditors will need to continue to ensure that they respond to these.
2. Regulatory impacts will broaden to other sectors
The focus of regulators has been extremely targeted through 2013; they have identified marquee players in each sector, identified their failings and then taken decisive action through imposing significant fines and consent orders. Initially they focused on major financial institutions, before progressing to other sectors such as auto, pay-day lending and debt settlement companies. Through 2014 we predict this trend to continue into other sectors such as telecoms and utilities, once again, with regulators expected to target major players.
3. Performance will remain a secondary focus, although some strategies will be unsustainable
The biggest change of the last year has been the industry’s shift in focus (particularly in the financial services sector), away from performance and firmly towards regulatory adherence; although discussed previously, the actions of the past 12 months undeniably highlight this. This will continue throughout 2014 and probably long into 2015, although we do believe that a number of the performance-damaging strategies deployed by creditors as an immediate response to regulatory pressures (e.g. the prevention of sale activity) will become unsustainable and will slowly start to be reversed.
4. The auditing of vendors will fundamentally change
Compliance and audit activity surrounding vendor management continues to focus on ensuring that suppliers have the right policies and processes in place. This, however, has been identified by regulators as being insufficient, as demonstrated by recent fines and consent orders. The actions (and not just policies) of vendors are the responsibility of creditors and so sufficient monitoring, oversight and risk mitigation is required around this. As a result, we see the audit landscape shifting throughout 2014, with more focus being applied to account level monitoring to ensure that identified policies are being adhered to.
5. Best practice will utilize new regulatory requirements to improve, not hinder, performance
The reactionary response to regulatory requirements through 2013 has resulted in creditors being forced into performance-damaging decisions such as reductions in panel sizes and the pulling of sales from the market. As such, new requirements have often been viewed as performance-damaging. As we enter 2014 creditors at the forefront of the industry which apply best practice will start to identify that new requirements can, in fact, drive and not hinder performance. By taking a more customer-centric approach to collections and improving the overall customer experience, underlying performance will naturally improve; examples of this include ensuring that all disputes are responded to in a timely manner and having a clear view of agency activity levels.
By John Telford, CEO TDX North America