Debra Ciskey, Senior Compliance Advisor
New client onboarding seems to start before the ink is dry on the collection agency contract. After all, most agencies want to be able to report astounding results in the first reports back to the client. Even when the stars align on the technical aspects of onboarding a new client, new accounts should not be loaded into an agency’s CRM until certain compliance-related boxes can be checked on your new client onboarding checklist.
Whether they ask about it or not, new clients should be introduced to your agency’s culture of compliance even before a contract is signed. A compliance officer must have the opportunity to understand the client’s operational requirements, and the client must understand the compliance needs of your agency prior to consummating the relationship. For example, the client needs to understand the duties of the collection agency to respond to disputes and the agreement should include provisions requiring the client to provide validation upon request. If your company will be furnishing data to credit reporting agencies on behalf of the client, Compliance needs to understand the process for gathering validation documentation in a timely manner so that reasonable investigations can occur within the timeline required by Regulation V, the Data Furnishers Rule. If no process is already in place, accounts should be be withheld from credit reporting until a process is confirmed and tested. Clients should feel comforted by the fact that your compliance efforts are not in place only to protect your company, but your clients as well.
Ask to review policies and procedures your client has in place to protect its customers from harm, such as their credit reporting policies, data retention policies, validation of debt policy, and UDAAP policy. If the client conducts in-house collection efforts before placement of past due accounts with a debt collector, your company should review the training provided to their in-house collection agents, and their own internal complaint, dispute, and dispute response policies. Be sure that your contract requires the client to inform you of prior disputes that have occurred on accounts they place with you, as well as the efforts they expended to resolve the disputes. If the client is a financial services company under the jurisdiction of the Consumer Financial Protection Bureau, check the CFPB’s Complaint Portal to determine if the company is prone to CFPB Complaints. Check to see if the company responds to the complaints. Ask the client if accounts on which complaints have been filed will be included in the portfolio they place to place with your company. Check the Better Business Bureau website for complaints as well. The fact that complaints have occurred is not necessarily a show-stopper, especially if the company is responsive to complaints. You many want to ask the client not to place accounts which have been the subject of prior complaints to prevent the “here we go again” syndrome for the consumer.
Clients need to know at the outset that your compliance department is there to help prevent the need to invoke indemnification if something goes wrong, but they also need to know that if allegations are raised as a result of something the client did or failed to do, the indemnification clause in your contract will be invoked.
Prepare the new client to receive information from you on dispute tracking and complaint tracking, and feedback on the ease or difficulty in getting information you need to respond to customer inquiries in accordance with the law and regulatory expectations.
What clients generally want to know monthly relates to collection performance, including average payment, amount collected to date—gross and net, amount and size of accounts closed and returned, and amounts and size of accounts in which their customers are engaged in a payment plan, as well as portfolio penetration rates, calls per account, letters sent, etc. Compliance related information that you should expect to provide to your client monthly should include the number of disputes received related to their accounts, average number of days elapsed from request for backup to receipt of back up, their response rate calculated by dividing the number of requests the client has fulfilled divided by the number of requests made, and requests (number and percentage) for information with the dispute or complaint related to alleged fraud or id theft. Before collection efforts even begin, set the expectation that trends related to complaints and disputes will be evaluated and their cooperation with responses is not optional.
Remember that the client is not always right. Get a direct client contact for compliance related issues. Don’t settle for going through your salesperson.
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