Summit Seeks to Find Common Ground between Collection Industry and Consumer Groups

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While there is worry that the Consumer Financial Protection Bureau’s new regulations will create problems for the collections industry, some ARM industry insiders are using the current period of Advance Notice of Proposed Rulemaking (ANPR) provided by the CFPB as an opportunity to communicate openly with consumer groups. 

Last month, an ARM publication, insideARM (affiliated with the iA Institute) hosted a Large Market Participant Summit in Washington, DC.  The summit included a panel moderated by an ARM defense attorney and in-depth discussion of what consumers want to see happen regarding the CFPB’s proposed new rules.  While many of the suggestions provided during the summit were not in sync with the ARM industry’s best interests, there were still some common goals found between consumers and collection industry insiders.    

Both sides reiterated the need for better data flow and verification of consumer debt.  Consumer advocates suggested one database that could be populated by the creditor or original lender, and accessed by downstream collectors.  However, according to Barbara Hoerner, counsel and Chief Compliance Officer at collection agency Progressive Financial Services, such a database could have negative consequences, such as data standards requirements added to ARM firm systems already struggling to handle the current ones. 

Both sides did agree, however, that a push toward better communication is important.  In such, any rule that the Consumer Financial Protection Bureau creates that serves to encourage more consistent and accurate communication would be readily accepted by both consumer advocates and ARM industry insiders.  However, the specifics of how better communication efforts would work in an increasingly digital landscape are muddy, at best.  Email communication and voice mail communication are two particularly difficult topics facing the industry, but regulators are beginning to see the value in focusing on them.  In the meantime, many in the collections industry are looking on the bright side and hoping the rulemaking period provides much-needed communication happening between both sides of the debate.  

Consumer Spending- Is It Actually on the Rise?

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There are plenty of ways to determine whether an economy is on the upswing or not, and one of the most popular to identify and discuss is consumer spending.  Most experts believe consumer spending and the general health of the economy directly correlate - that increased consumer spending indicates a growing healthy economy, and that decreased consumer spending is a sign of a poor economy. For this reason, analysts have been watching consumer spending like a hawk to determine when exactly we’ll transcend our current economic state.

Looking over these expert’s findings, we have some good news and some bad news. On one hand, consumer spending is on the rise. On the other hand, it isn’t rising as quickly as some experts feels it should be.

After years of savings and paying down debt, consumers are spending more on relatively non-essential items such as restaurant meals and new cloths than they have in years. Consumers aren’t, however, spending lavishly or purchasing too many big-ticket items, like new cars. The sort of consumer spending we’re seeing is promising, but it doesn’t indicate we’re out of the hole just yet.

Some analysts even worry that consumer spending should be much higher than it is right now according to other economic indicators. For example, at the end of 2011 U.S. salaries increased for the first time in 9 months, which some analysts feel should have resulted in a massive surge of consumer spending, yet didn’t.

Consumer spending, like so much of economics, is as much about psychology as economics. We’re unlikely to see a huge jump in discretionary spending until consumers not only have the means to buy lavishly, but until they feel ready to buy big ticket items again.