Garnet Capital Advisors Blog

The Consumer Financial Protection Bureau has been quite active in recent years, and there is no sign that this trend will stop in 2015.

CFPB's bold plans
The government agency plans to address several concerns this year, including debt collection, payday loans and overdraft protection, according to American Banker. By pursuing these matters, the CPFB could have a big impact on the lending industry.

Since inception, the regulator has launched several lawsuits against a range of companies, The Wall Street Journal reported. While supporters have applauded the organization's efforts, some industry participants have asserted that the CFPB is overly critical of the financial services industry, and that the required amount of documents needed for compliance has grown too cumbersome. 

Investigating debt collection
One major initiative the organization will address this year is existing debt collection practices. The government agency is currently leaving no stone unturned when reviewing these activities, Lisa Stifler, an attorney specializing in debt collection, told American Banker.

While the regulator conducts this comprehensive review, consumer groups have been contending that instead of providing rules that impact only one facet of the sector, the CFPB should create rules that govern the entire debt lifecycle, American Banker reported. By doing so, the regulator could help "even the playing field" for all credit types, they have asserted.

Alternatively, banks have been arguing that the CFPB should take a far more narrow approach by simply creating rules for third-party debt collectors, according to American Banker. According to these industry participants, the government agency should provide first-party banks with different treatment.

Payday lending
Another area where there is a significant divide between the viewpoints of industry groups and consumer advocates is payday lending, and this is one matter the regulator plans to review this year. To gather industry input, the CFPB plans to create a panel of small lenders to speak with them about their plans to offer payday loans, The Wall Street Journal reported.

While these financial institutions will have a chance to give their input, groups representing consumers are pushing for more stringent rules that would require lenders to conduct more thorough due diligence - which would include confirming the credit history, income and expenses - before granting them credit, according to The Wall Street Journal.

In this situation, any financial institutions selling loan portfolios must be sure to follow the best practices for both loan sales and ensuring consumer privacy.

If financial firms want to increase their odds of having a sale that goes off without a hitch, they might consider working with Garnet Capital Advisors, a loan sale advisory firm with extensive experience across all types of debt.