Compliance
Risk in
the Debt
Collection
World:
One Company’s
Risk Management
WHEN WE THINK OF COMPLIANCE RISK, debt collection is not usually one of the functional areas that receives much fo- cus (unless, of course, the institution is subject to the Fair Debt Collection Practices Act, because it collects its debts as well as
the debts of other organizations). Nevertheless, certain federal laws, such as the
Fair Credit Reporting Act (FCRA), some state laws, and general concern about
reputation risk drive the need to ensure that bank practices align with the objec-
tives of consumer protection laws and regulations. In fact, the importance of con-
trolling risks associated with collection practices has grown because of increasing
numbers of loan delinquencies and defaults and the corresponding heightened
public concern about and scrutiny over credit-related practices.
Recently, ABA Bank Compliance magazine (ABABC) spoke with management
at Wilmington Trust Company (WTC), an institution that has adopted a proac-
tive strategy to maximize risk control by training debt collection staff on a com-
prehensive array of consumer protection laws. We asked members of the bank’s
management to discuss their perspective on this risk management approach: Why
they do it? What are the benefits? And what’s their view on compliance risk in the
debt collection function, given today’s challenging environment?
ABABC: First, for context, can you give
us a little background about your bank?
WTC: Our company was founded in Wilmington, Del., by
members of the du Pont family in 1903 and provides diversified financial services through three businesses: regional
banking, corporate client services, and wealth advisory
services. With more than $11 billion in assets, our regional
banking business offers retail banking services in Delaware
through an extensive branch network and commercial
banking services to middle-market businesses in the mid-Atlantic region, which we define as the state of Delaware
and the parts of Maryland, New Jersey, and Pennsylvania
that are within approximately 150 miles of our Wilmington
headquarters. We are relationship-focused, seeking clients
who want long-term relationships with their bankers and
who value having direct access to decision makers.
ABABC: How does compliance training
fit into your organization’s overall risk
management efforts?
WTC: As an organization, we have a strong culture of
compliance. Compliance training is a fundamental component of our corporate compliance management policy and
an important tactic of our risk management strategy. We are
committed to providing staff members with the necessary
education to carry out their responsibilities and to comply
with all applicable federal and state laws and regulations.
ABABC: Who receives compliance
training at your bank?
WTC: All staff members with lending responsibilities,
including loan officers and originators, credit analysts,
underwriters, and lending support staff members receive
