What Challenges and Opportunities Lie Ahead for ARM?

Mike Ginsberg

As we leave the dog days of summer behind and look forward to the crisp cool air of autumn, executives focused on providing debt collection and other accounts receivable management services cannot help but feel a little anxious about what’s looming on the horizon for the remainder of this calendar year and beyond.

Here are 5 major business opportunities and challenges that lie ahead in ARM:

1. The CFPB will release its definition of larger participants in the fall. The CFPB has already made its intentions clear that it will provide regulatory oversight of the larger participants in the debt collection and asset purchasing industries as part of its broader supervision of non-bank financial entities. We expected them to release their definition of larger participants by July 21st. While this date has come and gone, the latest indication is that the CFPB will get its act together sometime in the fall. This topic remains on the top of most lists.

2. State and Federal legislators will continue to make moves. From rewriting FDCPA, TCPA and TILA at the Federal level, to actions taken by states’ AGs, we anticipate heavy activity from legislators but not until after the presidential election.

3. Agencies will feast on new business opportunities.  Considering the staggering default rate increase in US backed student loans [inventories totaling $60 billion in 20111] and the amount of new business available from cities and counties across the country [$40 billion of outstanding receivables (parking tickets, fines, taxes, etc.), agencies in these markets are well positioned for growth.

4. Loan originations are again on the rise. Credit card loan originations, down as much as 30% since the 4th quarter of 2008, started to grow again in late 2011.  Regional banks are also moving back into credit card market, presenting another growth area for national bank card agencies.  I hear the sighs of relief coming from the large ARM companies focused on this market segments.

5. Unemployment will not improve in 2013. The unemployment situation is not expected to improve anytime soon. Add to this that consumers will continue the theme of reducing their debt burden (except for student loans) and executive should expect to see no substantial improvements in liquidation results in the foreseeable future.

I hope you can join me Wednesday during my keynote presentation, “This is Not Your Daddy’s Debt Collection Industry” at DCS 2012 at Red Rock Las Vegas when I cover these and other timely matters impacting the ARM industry.