Businesses face an array of federal and state regulations, many of which have direct impact on the call center. The resources that must be dedicated to assure compliance are not trivial. Significant time and money must be spent on keeping abreast of regulations and complying with their requirements. While compliance is required for companies to operate, the compliance efforts do not contribute to business productivity. To prevent becoming overwhelmed by the many regulations that pertain to your business, it pays to invest in a system that can help you put your compliance house in order and maintain it efficiently.
First, let’s take a look at one of the most regulated industries in the world – Finance and Banking – and the Consumer Financial Protection Bureau, or CFPB, which is the federal agency in charge of enforcing financial regulations in the USA.
The CFPB Aims to Right Many Wrongs
The CFPB was created in 2007, following the financial crisis that was precipitated by unfair and deceptive consumer lending practices in mortgages, credit cards and loans. This prompted the United States Congress to demand more regulation for the finance industry. Mind you, the finance industry was not lacking for consumer protection regulations beforehand. But what the CFPB did was to unite consumer protection under one federal agency where enforcement could be centrally managed. Immediately, the CFPB took over the enforcement of more than a dozen federal laws that were already on the books, as well as new regulations that were created by the Dodd-Frank Act.
Its broad coverage of consumer financial products and the sheer number of statutes it enforces makes the CFPB a powerful regulatory body that businesses must deal with strategically and operationally. As part of their enforcement mandate, Dodd-Frank also gave the CFPB the authority to penalize (i.e., fine) companies who violate consumer protection laws. To date, the CFPB has collected billions in fines from companies engaging in shady practices. The CFPB is serious about compliance with the law and so should your business be.
What is CFPB Compliance?
This may actually be the wrong question because as explained above, the CFPB supervises and examines numerous statutes and regulations that are applicable to several industries and consumer finance practices, including:
- Automobile Financing
- Consumer Reporting
- Credit Card Account Management
- Debt Collection
- Education Loans
- Mortgage Lending
- Short-Term Lending
- Small-Dollar Lending
- Prepaid Accounts
- Remittance Transfers
Not only that. Since its creation, Congress has extended the CFPB’s reach beyond the original consumer fraud and abuse protections in Dodd-Frank to include new regulations that have cropped up around financial transactions and electronic record-keeping. Relevant federal statutes that are examined by CFPB also include:
- Consumer Leasing Act (CLA)
- Electronic Fund Transfer Act (EFTA)
- Fair Credit Reporting Act (FCRA)
- Fair Debt Collection Practices Act (FDCPA)
- Home Mortgage Disclosure Act (HMDA)
- Real Estate Settlement Procedures Act (RESPA)
- Truth in Lending Act (TILA)
- Truth in Savings Act (TISA)
- Others
CFPB Compliance: What you need to know
Before you can develop an effective CFPB compliance program, you first need to get a handle on the consumer protection laws and regulations that obligate your business to comply. Do I have consumer finance, financial transaction, or electronic record-keeping practices that require compliance? Are there specific statutes for my industry?
Bear in mind that CFPB jurisdiction is not limited to the consumer finance industry. When it comes to debt collection or prepaid accounts, service providers in other industries may be required to show compliance. For example, the collection and remittance practices of healthcare providers and real estate agencies are subject examination by the CFPB.
Also, when planning a compliance management system, remember that CFPB operates at the Federal level. Individual States have their own statutes and regulations that must be taken into account as well.
For many business, CFPB Compliance seems overwhelming. Especially when different regulations require different data retention periods; or when auditors request copies of specific interactions within very short deadlines.
CFPB Compliance: Mission Impossible?
Any business that is subject to CFPB compliance needs a compliance management system. In its Examination Procedures for Compliance Management Reviews, the CFPB states:
“To maintain legal compliance, an institution must develop and maintain a sound compliance management system (CMS) that is integrated into the overall framework for product design, delivery, and administration across their entire product and service lifecycle. Ultimately, compliance should be part of the day-to-day responsibilities of management and the employees of a supervised entity; issues should be self-identified; and corrective action should be initiated by the entity.”
Often, compliance can affect the way data, such as bank transactions or voice recordings are stored, encrypted and archived. In addition, the rapid digitalization of service channels puts a further strain on compliance activities because the same standards need to be applied across the board: from capture to retention for voice, video or text. Ideally, compliance considerations should be factored into company operations and business practices from the very start.
Incorporate CFPB Compliance from the get go
To ensure that an organization is compliant by design, it is best to bring together proactive compliance assurance capabilities, dedicated policy, and retention management under a single umbrella. Ideally, a compliance management system should be able to automatically identify violations, spot interactions that were not adequately recorded, define policies for recurring tasks, and leverage analytics to apply the right corrective measures. This will enable organizations to ensure their compliance level is always optimal.
CFPB Compliance: don’t go it alone
There is a lot to understand with regard to CFPB enforcement policies and procedures. It pays to work with experts in the field not only to understand where your compliance obligations lie, but to help you develop a compliance program and to implement the most effective compliance management system for your business.
No matter the scope of your CFPB compliance needs, or the state of your current compliance efforts, the experts at NICE can help you design and implement a compliance management solution that will help your business operate smoothly and avoid violations.
