Debt collection practices remain key regulatory | KPMG | US

Debt collection practices remain key regulatory and compliance focal area

Debt collection practices remain key regulatory

Analyzing Strategic Regulatory Policy Shifts

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Recent actions by multiple regulatory authorities at both the federal and state levels reaffirm that debt collection practices remain a key regulatory and compliance focal area. Examples of such actions include:

  • The release of the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit for the first quarter of 2017 on May 17, highlighting an increase in auto and student loan debt as a percentage of total household debt in combination with an upward trend for auto and credit card debt delinquencies and continued, “stubbornly high,” student loan delinquency flows.
  • A May 16 Consumer Financial Protection Bureau (CFPB) report on student loan defaults.
  • A May 15 ruling by the U.S. Supreme Court finding that a creditor may file an obviously time-barred debt as part of a Chapter 13 bankruptcy filing without violating the Fair Debt Collection Practices Act (FDCPA).
  • A yearlong initiative, “Operation Collection Protection,” undertaken by the Federal Trade Commission (FTC) and the CFPB in partnership with multiple federal, state, and local law enforcement entities. Collectively, they filed more than 165 enforcement actions throughout 2016 to address illegal debt collection practices.
  • FTC and CFPB reports highlighting debt collection-related complaints as the most common type of consumer complaint received.

KPMG LLP’s Financial Services Regulatory Risk practice has prepared a Point of View paper looking at areas where creditors and debt collectors can begin to review and strengthen their own practices in light of the recent rise in personal debt and the heightened federal- and state-level regulatory attention being directed toward debt collections activity. The paper expands on a KPMG Client Alert released last summer analyzing the impact of possible CFPB proposals to reform the FDCPA for third-party debt collectors.

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