The Consumer Financial Protection Bureau will focus on data accuracy, data completion and how consumer disputes are handled when policing large collection agencies, Peggy Twohig, assistant director, Office of Nonbank Supervision, with the federal agency said Thursday.
Twohig told attendees at the 20th annual Financial Services Collections & Credit Risk Conference that the federal agency wants to pinpoint any systemic problems within the industry that impact consumers.
The key goal with oversight, she said, is to ensure agencies have some type of compliance system.
"The more we can be assured that there is a system in place, that's being used, then the better it will be for everyone," she said. "We haven't seen much of that so far with the nonbank entities as they haven't been subjected to much oversight. The goal is simply to strengthen compliance programs. Is there adequate employee training? How are the complaints processed, reviewed and handled?"
Collection agencies, debt buyers and law firms with revenues exceeding $10 million per year will fall under the federal agency's supervision starting Jan. 2, 2013, it confirmed Wednesday. An estimated 175 companies likely will fall into the classification.
"We want to be sure the debt can be verified so that we can be sure collection efforts are for the right consumer, and for the right amounts. This seems like still very much a problem that needs addressing," she said. "And we want to understand, what is the information being sold with portfolios. Is it enough?"
Twohig assured attendees, including a large percentage of collection agency owners and executives, that the bureau understands the importance of debt collections for the greater economy and financial marketplace and that examiners will be fair and keep any company being audited informed of the process.
"We're very serious about being a data-driven agency and gathering information to carefully analyze before we take any action on it," she said. "Ultimately [for agencies that undergo an examination] we'll issue a report and hopefully our examiners would have had enough discussions through the process that any report won't be a surprise," she said. "As long as it doesn't come down to a public enforcement issue, all of this will be confidential as well."