Debt Collection Rule Making Moves to SBREFA Phase

insideARM has learned from multiple industry sources that the Consumer Financial Protection Bureau (CFPB) has scheduled the next step in debt collection rulemaking, the Small Business Regulatory Fairness Enforcement Act (SBREFA) hearing, for the week of August 22, 2016. The exact date has not been announced; several firms have been invited to “reserve that week” on their calendar to participate as Small Entity Representatives (SERs).

In March insideARM hosted a webinar entitled, “Top Five Takeaways for the Debt Collection Industry from the Arbitration SBREFA Panel.” The summary slides can be viewed here. Based on this outline, here is what we might expect to see in the coming weeks/months:

• SERS are selected and receive initial communications regarding the SBREFA process
• Documents released publicly and to SERS including an outline of proposals
• Introductory phone call with SERs
• Materials discussion phone call with SERs
• SER in-person meeting with SBREFA Panel
• SER written materials due (30 days following the live Panel)

In May insideARM published an article by Jane Luxton from ClarkHill that detailed the follow up to the Arbitration SBREFA Panel. She noted that, based on input from the SERs, the Panel made thirteen recommendations to the CFPB. She also noted,

“It appears the Bureau was unpersuaded by the SERs’ comments, saying repeatedly that after carefully considering these views, “the Bureau preliminarily finds that the proposed rule would be in the public interest.” Where not outright rejecting the SERs’ arguments, the Bureau indicates its willingness to receive further comment. No doubt, further comment will be forthcoming and, at a minimum, the SBREFA report provides both significant questions the Bureau – and potentially the courts – must address, and a good set of themes for other interested parties to build on during the comment period that is now beginning.”

Debt collection – which some might say is a far more complex topic than arbitration – is sure to draw quite a bit of input from all stakeholders. The majority of the ARM industry has been waiting and hoping for the CFPB to use its rule making authority to provide clarity to many grey areas surrounding debt collection laws. Many, many hours have been invested over the last several years by industry groups and individual companies to educate the Bureau on the nuances of debt collection laws and processes.

It seems we may soon get a peek at the direction this is headed.

Note: No official announcement has been made by the CFPB regarding the timing of the SBREFA Panel. The information above is based on information gathered from a number of industry sources.

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