CFPB Touts Innovation, But Not in Debt Collection

The Consumer Financial Protection Bureau (CFPB) is a
self-proclaimed 21st century agency. They back this up with
activities like Project Catalyst, which yesterday released its first-ever
Innovation Highlights Report.

You can access
the full report here
.

CFPB Director Cordray also spoke Sunday night at the Money
20/20 conference about promoting consumer friendly innovation. He said, 

“One of
Project Catalyst’s top priorities is to engage closely with companies,
entrepreneurs, and other stakeholders who are at the front lines of innovation…
To help facilitate access and innovation, the Consumer Bureau launched Project
Catalyst four years ago. Back then, this initiative was a novelty for a
banking regulator, both here and around the world. We have since had many
discussions with our counterparts in Europe and elsewhere, and we share a
growing enthusiasm for finding ways to leapfrog forward to products that are
more accessible, more affordable, more convenient, and more empowering of
consumers.”

He highlighted the following developments:

  • Expanding access to credit
  • Supporting safe consumer financial records access
  • Better cash-flow management
  • Increasing options for student loan refinancing
  • Modernizing mortgage servicing platforms
  • Improving credit reporting engagement
  • Improving peer-to-peer money transfers
  • Supporting consumer savings

Project Catalyst also oversees the Bureau’s “trial
disclosure waiver” policy which is intended to support pilot testing of new
innovative disclosure approaches that could promote transparency and improve
consumer understanding, as well as its “no-action” letter policy, which is
designed to reduce potential regulatory uncertainty for innovative products
that promise significant consumer benefits.

insideARM perspective

We at insideARM applaud the CFPB’s focus on innovation. We
have also recognized the reality (irony?) that the Bureau’s actions are encouraging
innovation in all areas… except debt collection. In that area, the actions and
potential rules seem to be taking the country backwards, reinforcing the use of
snail mail, and not providing sufficient guidance for the use of modern
technology. Some would say that the outline of proposed rules presumes the use
of email, or possibly other methods of communication, assuming one has consent.
But the method of gathering and managing that consent is the devil in the
details. Basically, you’ve got to get consent through one of those methods with
which consumers generally refuse to engage.

Also worth mentioning here is the fact that the clock is
being turned back in the area of calling on the telephone too. While this is
the purview of the Federal Communications Commission and not the CFPB, the
latest innovation in dialing produced by the recent rules is basically… wait
for it… the rotary phone.

We too are focused on
innovation. To this end, The iA Institute (publisher
of insideARM) is in the process of forming an Innovation Council to leverage
the collective imagination of big thinkers from across – and outside – the ARM
industry, including creditors, collectors, and technology organizations. The
Innovation Council will work closely the Consumer
Relations Consortium
, also managed by The iA Institute, to develop
ways to address emerging regulations, better serve consumers, and still manage
to remain profitable. If you think you can contribute, please get in touch.

CFPB Touts Innovation, But Not in Debt Collection
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