Ethics: The Missing Ingredient in the Collection Industry Business Model

Jerry Ashton

What if ethics were promoted as an essential ingredient in our industry’s cookbook for individual, corporate, and agency success? What if we ensured that its presence in our operations were enshrined in our policies, procedures, and mission statements; and enforced in our daily actions?

Would putting ethics first make a difference in the way our industry is perceived? In the way we deal with our clients and their debtors? In the way we are held by governmental agencies and consumer advocacy groups? In our bottom line?

But, simply defined, what is ethics?

eth•ics

1. a system of moral principles: the ethics of a culture.
2. the rules of conduct recognized in respect to a particular class of human actions or a particular group, culture, etc.: medical ethics; Christian ethics.
3. moral principles, as of an individual: His ethics forbade betrayal of a confidence.

Before you dismiss my question, or second-guess my intentions, you may first want to hear an Internet Radio interview I recently conducted with Michael Brozetti, CiA, CISA, CGEIT. This is a man who, in addition to being a Certified Internal Auditor & Training Partner with the Institute of Internal Auditors, Villanova University, and the Homes Corporation, is a sought-after speaker on the topics of ethics, governance and culture.

In his opinion and experience, internal auditing is the corporate conscience; its practitioners are the shield bearers of an organization. Is that true for you, or your operation?

According to Michael, the quality of the ethics and compliance systems in place in your operation will be a relevant factor when people judge the good faith and fiduciary duties of your company’s leadership and management.

In fact, given the myriad laws that affect the collections industry, there is precedent in the Federal Government Code of Ethics that asserts that if a U.S. Corporation can demonstrate that their ethical system is designed and operating to a higher standard of fitness than that of the federal entity trying to regulate them, the constructive argument of “qualified immunity” is plausible, reasonable and compelling.

Many of my readers already know of my series of blogs excoriating JPMorgan Chase for firing veteran credit and collections veteran (and Black Belt), Linda Almonte.

As Michael points out, if Chase had diligently and faithfully followed a Code of Ethics, that firing would never have taken place; there would never have been cause. Linda would still be happily and productively employed instead of homeless and jobless, and Chase would have saved countless dollars and hours defending – and continuing to defend – their actions. (Editor’s note: background at http://onforb.es/iVprb0)

Let’s take my recommendation of adopting a strict Ethics Code a step further — way further. What if an agency were to require a standard agreement be in place with its clients and prospective clients that set down such standards and ground rules as:

1. We will not work accounts out of statute
2. We will not work accounts that cannot be documented in full as necessary to satisfy the court
3. We will not work accounts that have been secured by the client by way of predatory lending practices
4. We will not work accounts that have been subject to accelerated fees
5. We will not work accounts that have been created through unethical sales practices
6. We will not (fill in the blanks)

Could you do that? Would you do that? Stop chasing those payday loans, the faux mortgages, the out-of-statue or poorly documented credit cards? Would you turn down business just because of…ethics?

It may be time for an industry gut-check. Enjoy Mr. Brazetti’s talk, which you can find here: http://bit.ly/q6iBNe. Take good notes, decide whether the points he makes are important, and then roll up your sleeves and reset your personal and/or company’s moral compass.

The company (and soul?) you save may be your own.