The debt recovery industry has always developed and evolved alongside technology. Where once the invention of the telephone revolutionized the process of debt recovery, the 21st century has seen rapid development in software, pushing the boundaries of what is possible. But like any developing system, complexity is often a byproduct of this development.
Regulation F is a new series of laws governing the debt recovery industry that attempts to provide a regulatory framework suitable for the 21st century. But what exactly is Regulation F, and how does it impact debt recovery performance?
What is Regulation F?
On November 30th 2021, the Consumer Financial Protection Bureau (CFPB) enacted Regulation F as part of the Fair Debt Collection Practices Act (FDCPA). The FDCPA is a federal law that regulates the actions of third-party debt collectors who act on behalf of another person or entity. The purpose behind the FDCPA is to mediate the relationship between third-party debt collectors and consumers to encourage a cooperative environment.
The recent regulation F is a new modification under the FDCPA which has brought with it changes to communication and the transfer of information between collectors and consumers. Its aim is to eliminate abusive practices and ensure customers are treated fairly, which effectively removes the unfair advantage of debt collectors that use abusive practices. Regulation F also aims to ensure that consumers are given the right information to understand the costs, benefits and risks associated with debt.
What are the significant rulings of Regulation F?
A significant portion of Regulation F’s ruling is related to the communication between collectors and consumers. It rules that companies cannot communicate with consumers at unusual times (before 8:00am and after 9:00pm) as well as a new 7-in-7 rule that stipulates there may be no more than 7 calls made in a span of 7 days. Regulation F also restricts where consumers can be contacted by prohibiting communications at inconvenient places, including places of work. If an organization breaches any of these rules or attempts to engage in repeated phone calls, it will be considered harassing, oppressive or abusive conduct.
Regulation F has brought changes to validation laws. Organizations collecting debt must now provide information that is clear, conspicuous and contains all the material sufficient for the consumer to comprehend and understand the overall debt. The regulation also expands the prohibition of misleading or deceptive information in order to protect consumers from manipulation and false information.
What effect has Regulation F had on debt recovery performance?
We’re still in the early days of the effects of Regulation F, but it’s clear it has resulted in a far greater focus on the relationship between debt collectors and consumers. The new restrictions limiting communication have put greater emphasis on the types of communication that are still lawful. Building, developing and maintaining a positive and healthy relationship with consumers is pivotal to healthy debt recovery performance. Without financial institutions committing to full cooperation with customers, it’s difficult to safely work accounts post Regulation F.
Regulation F has also added greater clarity to the choice of reputable organizations and promotes a greater sense of trust in companies who can demonstrate compliance. Regulation F has ultimately helped to foster a greater sense of trust and more healthy relationships between consumers and organizations, which will improve the outcomes for all parties as a result.
How to improve debt recovery performance through improving customer relationships
Financial institutions have never been more dependent on building strong relationships with their customers. Here at C&R Software, we’ve always placed clients and their customers’ experience at the center of what we do. As collections and recovery become ever more demanding as a result of legislation like Regulation F, our market leading software is helping businesses across multiple industries adapt.
A highly configurable platform, Debt Manager is designed to make the process of collection simpler, more effective and more responsive to the unique needs of consumers. An optimized system results in a more streamlined process for agents and consumers alike.
Are you concerned about your debt recovery performance post Regulation F? Contact us today to find out how we can help you build a more tailored experience for your customers’ individual needs, keeping you fully compliant with all legislation.
