Debt Buyers: Shrinking Opportunities Amid Regulatory Reform

Michael FlockIndustry Insights

abfjournalRecently ABF Journal published the article Debt Buyers: Shrinking Opportunities Amid Regulatory Reform by FLOCK Finance Chairman/CEO, Michael Flock.

As the pool of available credit portfolios has shrunk, many debt buyers have failed to diversify into other types of credit. Michael Flock notes that specialty lenders need to develop new solutions for a wider variety of portfolio asset classes amid increasing regulatory challenges that are changing the playing field.

In the article, Michael shares that as the pool of available credit portfolios has shrunk, many debt buyers have failed to diversify into other types of credit, and that specialty lenders need to develop new solutions for a wider variety of portfolio asset classes amid increasing regulatory challenges that are changing the playing field.

But the shrinking number of portfolios is not the only challenge facing the industry…

Debt buyers are coming under more government regulation as the Consumer Financial Protection Bureau (CFPB) begins to enforce existing laws and review new regulations. In early November, the agency announced it is looking to write rules that may set new restrictions on originating creditors; require accuracy of documents shared between all collection parties, such as buyers and settlement firms; and update rules on how collectors communicate to consumers, including through text messages.

Special Finance Companies Can Be A Catalyst To New Growth

All of these changes mean that our industry is at a pivotal point.

In the old business environment, specialty finance companies provided the capital and moved on. But to meet the changes in the industry, specialty lenders need to develop new solutions for a wide variety of portfolio asset classes in multiple sectors: credit card, auto, healthcare and student loans.

They must understand how market conditions and increased regulation are changing the playing field, forcing debt buyers to develop a strong infrastructure to comply with regulations while also serving their clients. These funding solutions must meet those needs and enhance performance.

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