MBSi Capital’s Advice on Integrating Compliance into Repo Process
MBSi Capital Corp. acknowledged that interpreting compliance is not simple, especially when it comes to repossessions and recovery. The company compared it to trying to assemble a product from IKEA without directions.
While agreeing on a single, completely comprehensive definition of compliance can be an elusive goal, MBSi Capital insisted repossession agents who show they are aggressively trying to meet this challenge in an industry where the compliance burden is ever-growing are what separates prosperous agencies from floundering ones.
“Those vendors who are meeting the compliance challenge head on are the ones that will see themselves thrive and succeed,” said Greg Ward, the system sales director for MBSi Capital’s product, Compliance Made Easy.
“Those who bury their heads in the sand or opt to willfully ignore what’s going on around them will find it very difficult to survive. Compliance has to be a key component of any vendor’s business plan,” Ward continued.
Ward indicated that making compliance part of the workflow is something that should start immediately by systematically training employees to ensure adherence to proper policies and procedures. He pointed out that finance companies want to be able to see how repossession agents are training their employees, not just to make sure that they will do a good job, but also that they know the right way to conduct themselves.
“If you cannot readily show you are properly training your staff, tracking all of your complaints through to resolution and ensuring you have the proper licensing and insurance in place, it is fairly likely you will lose business to someone who does at some point in time,” Ward said.
“Having the systemic ability to address these areas of compliance with reporting in place, business will grow and market share will increase,” he added.
Ward acknowledged the threat of an audit or investigation by Consumer Financial Protection Bureau has been used to push many finance companies and recovery departments into spending thousands on products and services, but to date, the agency has yet to even hint at being interested in looking at how repossessors operate.
While nothing specific has happened yet, Ward stressed that industry professionals do believe that it’s only a matter of time before the Consumer Financial Protection Bureau’s interest level in the repo industry increases, which is why it’s important for those in the industry to comprehensively address areas of compliance today.
“Lenders nationwide are altering their service-level agreements with compliance addendums like never seen before. And the level of due diligence being conducted on vendors is more thorough than ever,” Ward said.
“The need to proactively make strides in the area of compliance is not something that is just going to up and disappear one day,” he continued.
Tracking complaints is actually where Ward sees the biggest compliance gap between finance companies and repossessors. Ward estimated 80 percent of complaints are not currently documented.
If regulators were to see that such a significant number of complaints were not valid or resolved quickly and properly, Ward believes regulators’ comfort levels will actually increase and pressure will be taken off of the client in the long run.
“One thing I have learned over the past year is that there are three types in this industry,” Ward said. “The ones who fight and oppose compliance, the ones who sit back and wait, and those who meet it head-on and actually see this as positive and take action.
He went on to say, “Let me say this: Which group do you think the top lenders will ultimately end up working with? That’s an easy question to answer, right? Here is maybe a more difficult one to answer. In which group are you?”
Editor’s Note: Greg Ward discusses the three components of MBSi’s Compliance Made Easy suite of products and services through a podcast that’s available on the company’s blog.