Many moons ago, after witnessing what the Resolution Trust Corporation did with the debt left behind by the Finance Industry collapse in the 1980s, a group of collection entrepreneurs approached the banking industry with the unprecedented concept of selling their charge off accounts to creative investors. It appeared that there might be an opportunity for investors to make a healthy return by negotiating repayment plans with consumers who had been charged off due to default. Insane, some proclaimed. The rest is history.
Although the debt purchase industry has suffered setbacks over the past 10 years, the market is on a resurgence and opportunities abound, but not for everyone. Regulators have looked cynically at the practice of buying and selling debt and although billions of dollars of portfolios have passed through sales over the decades, the mandate today is for a more controlled and compliant culture. Rogue buyers and sellers are no longer tolerated and the mantra is compliance, compliance, compliance.
It is quite appropriate that this edition of Collection Advisor focuses on both debt purchase and compliance. The only way the uptick in the debt purchase market will continue into the future is to have a strong dedication to managing compliance processes, data security and ethical standards. Education will be more important than ever for businesses engaged in this industry sector. We need to train, train, train.
The new culture throughout the entire collection industry mandates that servicers maintain impeccable standards and those standards have to be tested and validated. The educational programs, certifications, designations and learning opportunities available in 2019 provide a wealth of guidance to keep every collection organization operating within regulatory and legal boundaries. However, simply attending a seminar, preparing impressive proposals and touting your organization’s years of experience won’t cut it moving forward.
The Receivables Management Association (rmassociation.org) launched their Certification program in 2013 which offers professional designations to companies and individuals operating and employed in the receivables management industry, specifically debt purchase and servicing. Their goal is to provide enhanced consumer protections by implementing uniform industry standards of best practice. At a recent conference I served on a panel with debt purchase industry veterans and it was noted that few deals are orchestrated today without the respective players maintaining these critical credentials.
ACA International Certifications
ACA International (www.acainternational.org) likewise offers a host of credentialing programs that allow firms to demonstrate their compliant focus by encouraging key staff members to further their education. Some of the professional designations include:
• Credit and Collection Compliance Officer (CCCO)
• Credit and Collection Compliance Attorney (CCCA)
• Credit and Collection Compliance Professional (CCCP)
• Professional Collection Specialist (PCS)
• Collection Industry Professional (CIP)
Most of these industry titles include the need to renew the credentials periodically, thus ensuring that designees have the most up-to-date and critical information to make compliance decisions central to their collections processes.
Debt will be dynamic in the US culture for generations to come. The value of that debt and willingness of investors to play in this market may ebb and flow. Knowledge of compliance and the need for participants in the market to create, track, educate and demonstrate their knowledge of the rules of the game will continue to grow in importance. The game has changed, the rules are tougher and the only organizations that will be in business in 10 years will be those that embrace a consumer centric world with no patience for those who don’t play that game fairly.
We continually welcome thoughts and best practices from our readers. Feel free to send us your feedback for possible inclusion in a future column. Until next time, I’m at my ACA Office waiting to hear from you!