The CFPB published its Supervisory Highlights this week, highlighting examinations across various financial products that were conducted between January and April of this year. The Report highlights key findings made by the CFPB and provides insight into the current focus of the examiners. The current edition of Highlights provides insights on consumer reporting, fair debt and student lending, but the centerpiece of the Report are the key findings regarding the mortgage industry. Yesterday’s post focused on consumer reporting agencies and future posts will focus on the findings with respect to student lending and mortgage. Today’s post focuses on debt collection.
The Highlights indicate a focus of examiners on compliance management systems and the adequacy of investigation of dispute notices.
Compliance Management Systems
The CFPB report emphasizes the CFPB’s expectation that financial institutions maintain robust compliance management systems tailored to their operations. In this regard, the CFPB emphasized:
- Boards of directors need to hold regularly scheduled meetings and receive information sufficient to adequately oversee compliance practices;
- Institutions need to maintain formal escalation procedures for third party debt collection personnel who were delinquent in completing their required training;
- Institutions must maintain comprehensive compliance audit programs;
- Institutions need to adequately document consumer complaints and their resolution.
- Their expectation that financial institutions enhance their“procedures and monitoring program[s] to ensure complaints are timely identified, categorized, and resolved, and to conduct an audit to identify and analyze items; and
- Their expectation that all furnishers of information, including debt collectors, establish and implement written policies and procedures regarding the accuracy and integrity of the information they furnish to consumer reporting agencies (“CRAs”).
Reasonable Investigation of Dispute Notices.
No surprise to those that have read the CFPB Bulletins and reports on credit reporting, the examinations of debt collectors focused on their efforts to reasonably investigate disputes received from consumers and consumer reporting agencies. The CFPB Report emphasizes the CFPB’s expectation that financial institutions insure the information they provide is accurate. The key takeaways:
- The CFPB expects financial institutions to conduct a reasonable investigation with respect to disputed information after receiving a dispute notice from a consumer or a CRA;
- The CFPB expects financial institutions to review all relevant information provided, complete their investigation and report its findings to the consumer or CRA (whichever is appropriate) in a timely fashion;
- Simply deleting trade lines after receipt of a direct or indirect dispute will not suffice and does not fulfill the requirements of Regulation V; and
- The CFPB expects entities to track, investigate and resolve all direct or indirect consumer disputes.