Episode Description:
Today’s COMPLY Podcast is a discussion with Rhonda McGill. You may know Rhonda as our SVP of Client Solutions here at PerformLine, but what you may not know is that she is our resident compliance fortune teller. During today’s episode Rhonda and I walk through the compliance predictions she made for 2022, where things landed in the world of regulation, and her predictions for what we can expect to see in 2023.
Show Notes:
- Mortgage Industry Roundtable: https://bit.ly/3siTRlX
- 2022 CFPB Complaint Risk Signal Report: https://bit.ly/3F0RoEE
- CFPB Director Rohit Chopra: A Year in Review Blog: https://bit.ly/3EZRFro
- Follow Rhonda: https://www.linkedin.com/in/rhonda-mcgill/
- Follow Ashley (AC): https://www.linkedin.com/in/ashley-cianci
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The state of marketing compliance and regulation is evolving faster than ever, especially for those in the consumer finance space. On the COMPLY podcast, we sit down with the biggest names in marketing, compliance, regulations, and innovation as they share their playbooks to help you take your compliance practice to the next level.
Episode Transcript:
Ashley:
Hey there COMPLY podcast listeners! We are super excited for this week’s podcast with Rhonda McGill. If you know Rhonda, you know her as our SVP of Client Solutions here at PerformLine but what you may not know is that she is also our resident compliance fortune teller. During today’s episode Rhonda and I walk through the compliance predictions she made for 2022, where things landed in the world of regulation and compliance, and her predictions for what we can expect to see in 2023.
Thanks for listening and enjoy the show!
Ashley:
Hey Rhonda, thanks for joining us today!
Rhonda:
Thanks so much for having me, again.
Ashley:
It’s always a treat to have Rhonda on the podcast, so we are so excited for this episode. And it’s very timely, I would say, with spooky season coming up. And the context behind that is at the end of last year and kind of the beginning of this year as well, Rhonda we asked you just to make some predictions about what we could see coming down the pipeline in terms of the world of compliance. And spoil alert for all of our listeners, you were pretty much right on the money with most of the <laugh> predictions that you made. So your new internal nickname, at least from the marketing side, is you are our new fortune teller.
Rhonda:
<Laugh> I love it.
Ashley:
They said very timely with the spooky season, we have going on. So we are going to today walk through kind of what you had said, the predictions you made, where things landed in the world of compliance. And then what we would also love is for you to make a couple new predictions for what we might be seeing come 2023.
Rhonda:
Okay. Let’s see if I can do this.
Ashley:
<Laugh> Awesome. So to start, in October of last year, you spoke on a panel at the Lend360 conference, and you stated, “All eyes are on the data and fintechs need to show how they’re ensuring equity and their lending practices.” So two pieces there, focus on the data and then also focus on the fintech piece. Fast forward to October of this year, the CFPB just issued a series of orders to collect information on the business practices of these large technology companies that are operating payment systems in the United States.
Rhonda:
Wow. So yeah, I did that. <laugh>. Yeah, you know what the fintech platforms have really taken off. We all know that. So especially over the last few years, they’ve gained a lot of speed and a lot of popularity amongst consumers. Unfortunately, there are a lot of unknowns still in the regulatory space in terms of how to engage with them. And from a regulator standpoint, which parts are they responsible for? We keep hearing, now we’re starting to hear a little bit more about who are the true lenders when it comes down to certain things. So I think that it’s just one of those spaces that we’re gonna continue to hear a little bit about in that regulatory, you know, from a regulatory enforcement standpoint, I think that fintechs are gonna really need to focus on their compliance in this coming year. So that’s prediction number one.
Rhonda:
They’re gonna <laugh> have to really focus in on their compliance in the coming year, and it’s gonna be really critical that they have a monitoring process in place, and that they’re able to stay on top of the areas where the regulators are focusing. So we know that like some of the buy now pay later space, they’re really talking about regulating almost kind of like the credit card, they do the credit card industry. So we wanna see is that gonna start to come to fruition, so that that way at least they’ll know how they’re being monitored and they’ll know what to monitor for. So, you know, a fear that a lot of folks are really focusing in and looking at the CFPB because they’ve been very public with their enforcement. But the truth is there’s several states now that they’re kind of grappling with how innovation of the fintechs is starting to impact their residents and their respective states. So I think it’s one of those areas that we’re gonna really have to just keep our eye on. We’ve already started doing that here internally.
Ashley:
Absolutely. And I think one thing that we’ve tried to map out, and hopefully just to be helpful for clients and, you know, future clients, is that ecosystem that is fintechs and partner banks and even the BaaS model.
Rhonda:
Yes, yes. I always, I keep saying it’s like every time I look up, there’s a new acronym or some type of a new title, and you’re constantly chasing after how is this structured, But just imagine from a state level and from the consumer level, some folks don’t know who they’re actually getting the loan from. You know, they don’t know all the things that they don’t know. So it’s gonna be important that there’s some clear definition in the regulatory space so that we’re able to, especially on our end, we’re you know, we’re just going gangbusters and making sure that we’re helping to try to protect them in all the ways that we think are relevant from a regulatory eye. But we definitely would love to see some kind of that narrowing down and honing in on what it is exactly that their regulators are gonna be focusing in on. And like I said, it’s more than just the CFPB issue. This is a state-level issue as well. California has been very actively, you know, looking at how they’re approaching things with fintechs. So it’s just one that we’re gonna really have to keep our eyes on.
Ashley:
Absolutely. And just one more thing on that too, the OCC just issued their plan for 2023, which starts their year starts in Q4, for the rest of us. And they also explicitly talked about really the kind of the bank’s responsibility, but that’s it too. Like who does it actually fall on when it comes to compliance, the fintechs, the banks, the BaaS. So it’ll be interesting to see where this goes.
Rhonda:
All hands on deck!
Ashley:
Exactly. So be aware, it sounds like is our first kind advice to listeners, but then also the first prediction, a lot more to come in that space.
Rhonda:
Yeah, it’s one that I think we just have to keep looking at and but I would definitely say monitoring in that space is gonna be really critical just to kind of start really focusing in and understanding what the regulators are looking for. So we’re really gonna be paying close attention to rules around monitoring our fintechs partners.
Ashley:
Perfect. Awesome. All right. First prediction in the books for 2023 <laugh>. The next few predictions I wanna talk about were actually made during your Q1 Mortgage Roundtable of this year. And for those who aren’t familiar, Rhonda hosts these amazing quarterly virtual roundtables for compliance leaders in the mortgage space, and it’s really an opportunity for them to connect with one another, share best practices as it pertains to risk management and compliance in that industry. So during our Q1 roundtable of this year, you made several predictions that came to fruition. So I’m gonna talk about three specifically. We’ll go one by one. We’ll state what the prediction was, where things stand today, and then get any additional insights you might have.
Rhonda:
Sounds good.
Ashley:
So to start, you had stated over the next few months, more enforcements, more demand letters, more examinations, the CFPB is gonna bring larger penalties, higher enforcement amounts. Chopra doesn’t hesitate to make these things public and the CFPB put out today a notice, and this was reference back before, but today a notice asking for consumers to weigh in on rule-making and give thoughts on what needs be revisited. So again, that was all stated back in Q1 of this year. And we actually fast forward to today, we actually just published a blog last week on a year of review of Director Chopra, where you had stated since being confirmed, Director Chopra has focused on repeat offenders, prioritized enforcement over consumer education, and taken 20 enforcement actions against organizations. And bolstered enforcements by the states.
Rhonda:
Ooh, I was <laugh>, They were in my head. <laugh>,
Rhonda:
You know what 2022 has been a very difficult year in the mortgage space. So it’s been very rewarding to be able to get on the line each quarter with our mortgage partners out there and just to kind of hear where they’re concerned. You know, I always, first question I always ask folks is, Hey, what’s keeping you up at night? Because when you kind of understand what’s keeping them up at night, it’s helps you to better identify what are some of the things we really need to be focusing in on so that when we have our next roundtable, we’re really able to have some substantive conversation. But we also through our content, we’re able to kind of try to address some of those things as we’re kind of moving along throughout the course of the months. So a lot of the companies, mortgage companies out there, as I’ve spoken with folks they’re kind of dealing with kind of that double-edged sword of they’ve had to make some cuts to their staff.
Rhonda:
But compliance is a reality. It’s not gonna go away just because your business is a lot smaller. It doesn’t mean your compliance roles are gonna shrink too. So if anything, as I’ve talked to a few folks in the industry, you know, I’ve told them, you know, the reality is that when your business is not as robust as it once was, that is where your business is probably more ripe for taking a little bit more risk to drum up business, which also means that regulators know that. And so they’re not gonna take their eyes off of your business, if anything, they may be leaning in more to see to what lengths are you going to bring in new business. So it’s just one of those situations where I have, you know, really cautioned folks that as they’re making decisions in their business to really, really focus in on how they can bolster their compliance utilizing automated, you know, processes like we do here at PerformLine to monitor and be able to take action. So, you know, we are very proud of what we’re able to do to help to be a compliance partner for a lot of our clients. And so that’s something that, you know, we’re, we’re trying to lean in a little bit more and have those, you know, difficult conversations as we’ve seen some of, even our clients have to make cuts. So how can we help them during this difficult time, is one of the things that we’re really focusing in on here at PerformLine.
Ashley:
Absolutely. Yeah, I think that’s so important. Even though we wanna be there for everyone, I think that emphasis on automation around compliance is key, what you just said so that we can make the lives of our clients easier and make sure that, you know, it’s still a priority. Like you said, it’s not going anywhere. So we need to need to be supportive during this time. Absolutely.
Rhonda:
Yeah. And, you know, and one of the other things I could definitely say, you know, as you were mentioning the CFPB has been really taking a consumer-first approach in how they are looking at everything that they’re doing. So if consumers are complaining because they feel that they’re not getting what they were promised, or whatever their issue is that they’re complaining about, the CFPB is actually following up on those complaints. So it’s one of those things where, again, you know, we’re in a time where people are complaining more and people are feeling a little bit more empowered. They know that they can just drop an email or send something direct mail, or they can get on the phone and call in. So they’ve got so many means now of reaching out to regulators that I think folks are really taking the approach that they’re gonna make the complaints, and regulators are taking the approach that they’re gonna follow up on them. So this is where the consumers are definitely being given that upper hand advantage, and it means that from a business perspective, the business, the industry really has to take that under consideration as they’re making their decisions around compliance.
Ashley:
Absolutely. Absolutely. Great. So second point you made during this roundtable, it was focus on minorities and POC engaging in neighborhoods, the CFPB will be focusing on this in the future, and since which we’ve seen the CFPB take two enforcement actions against two separate mortgage companies for deliberate discrimination against minority neighborhoods. So it seems like this has been a hot topic for a while, but it’s not going anywhere.
Rhonda:
Nope. That’s another one. You know, redlining was a pretty huge topic at the beginning of the year, and if you remember the Department of Justice, the CFPB, and the Office of the Comptroller of Currency, the OCC, they announced an initiative around combating redlining. So just, I think in the last couple of weeks it was the DOJ just announced a settlement with the bank, that was around redlining. So and at this particular point, like up to date, the Department of Justice has settled four huge redlining paces with settlements totaling over $38 million in relief for impacted communities. So this here, like again, I keep telling folks, yes, you can look at the CFPB, but <laugh>, there are other in agencies, you know, the DOJ even on down to the state level that are really looking at, you know, what’s the long term impact. You know, are there redlining issues? How are we going into communities and are we bringing equal business opportunities or equal housing opportunities? What’s happening in that space? So it’s, enforcement is happening across the board. You might focus on CFBP, but DOJ is also doing quite a bit based on that initiative.
Ashley:
Yeah, absolutely. I think we talk a lot, like you said, a lot about the CFPB, but super important not just to focus on that and the state level, like is, do you think in the next year to come, the states are gonna get more autonomy in terms of, you know, enforcements and regulations?
Rhonda:
I think that the CFPB has really empowered states to do a lot more you know, over the last several months. And I think that, you know, this expanded authority and, you know, they’re really focusing in on UDAAP and all those different things. States are looking at these things too, and they are working in conjunction with the CFPB in some instances. So I think in the coming year you’ll probably see states working together, so probably more multi-state examinations. You’ll probably see a little bit more overlap with, I think like New York has worked really closely with the CFPB on a couple of larger enforcement actions. So you’ve got different states that are really, they’re taking the opportunity to really dig in and utilize pulling resources in order to focus on enforcement. So it’s really an opportunity again for, you know, from the industry standpoint and the consumer finance industry standpoint to really think about how can you shore up your compliance process to make sure that you have everything in place to be able to address the regulators when they come and they’re asking you about how do you collect data, what data are you collecting, what information you know, how are you using that to, you know, drive your clients to the next thing you know.
Rhonda:
So it’s all of the above consumers definitely are in the driver’s seat, and I think that from a regulatory standpoint, it’s giving regulators a lot to look at and a lot to go after. So I think there’ll be more opportunities for them to collaborate and work together, so multi-state examinations and a lots of crisscrossing is prediction number two. Is that two or three <laugh>? It’s gonna be a pretty busy 2023 from an enforcement standpoint.
Ashley:
Perfect. Yeah, and I, I’m not sure what prediction number we’re on. We will get a final count before we push this live. For sure.
Rhonda:
Here we go.
Ashley:
So, final look back prediction also from the Q1 mortgage roundtable you had stated, “Because forbearance is ending a lot of eyes on servicers and ensuring that consumers are protected.” And in May of this year, the CFPB published a report that outlines observations from data collected from 16 servicers. The data identified three main observations from mortgage servicers during the pandemic, which includes call center and whole-time variability, delinquency and exits from forbearance, and servicer data challenges. Servicing hot, hot topic <laugh>.
Rhonda:
Yeah. Servicing is becoming a hot topic, and thankfully here in Q4 we’re gonna focus a little bit on that in our roundtables. So I’m very excited to hear, you know, from a servicing, you know, professional, what are his thoughts on, you know, what are some of the things that our clients can do to or our partners can do to really shore up their business as it applies to servicing. So mortgage servicing, Yes. Servicing of any type. Yes, <laugh> I think is the thing that we need to really focus our attention on. But mortgage servicing is definitely one of the areas where I’ve been just trying to grapple and wrap my head around what are some of the areas of exposure. Thankfully, you know, the forbearance exit has been one that has not been as hard as a lot of people thought, but I think we need to really pay attention in the coming year, especially depending on how the economy lands with, you know, the pending recession.
Rhonda:
Some people say it’s gonna happen, some people say it’s not, but what is that gonna do to our job market? What is that going to do to, are we gonna put ourselves in the throws of, you know, another issue where forbearances are gonna, you know, people are gonna end up in, you know, forbearances or modifications of their mortgages. I don’t know what, you know, that’s one of the areas I’m not as savvy in, but I do see that there is almost like this weird perfect storm that you just can’t put your finger on what it is. And that’s one of the reasons why I really wanted to focus on servicing. So I guess I’m using my spidey-senses to plan ahead, I don’t know, starting to make myself a little nervous here, but yeah.
Ashley:
<laughing>
Rhonda
But yes servicing was, that was one of the reasons why I wanted to have the servicing discussion to round out this year’s roundtable series.
Ashley:
That’s perfect. And for all of those folks who want to join that mortgage roundtable, we will provide a link for it in today’s show notes. You can have access to all of the great conversations that’s to come in the next couple weeks.
Rhonda:|
That sounds great. I’m looking forward to that one.
Ashley:
That’ll be great. And I love mentioning this kind of storm that’s coming or not coming. It feels, it’s a strange time, right? Like the post-pandemic, what’s going on with the economy, the rates, there’s just a lot happening. And like you said, we don’t what’s gonna happen, but I think you said perfectly earlier, compliance is not going anywhere. And if anything, what we wrote about, what you wrote about last week in the blog about Director Chopra and the year that he’s had, he is definitely coming in full force. And I think it’s so interesting too because he stated not focusing so much on consumer education, but more so on that kind of enforcement.
Rhonda:
Yeah, exactly. Because I think the way that he sees it is that, you know, consumer education, it almost like takes from the consumer standpoint, they kind of take the guard rails off because they feel like they know and sometimes there are things that they don’t know, and as a result, they can fall into some unfortunate pitfalls, which is why enforcement and really understanding what’s going on in that space is important to, you know, to the regulators. I guess it just begs to, you know, to really, really reinforce what we’ve been talking about all along throughout this particular podcast about making sure you’re monitoring, making sure you understand, because now they’re, I think one of the focuses also in 2023 is not going to be, they’re not trying to take businesses out.
Rhonda:
They’re trying to sharpen the thought process and, you know, being more thoughtful around the consumer. So they’re gonna look at who are the repeat offenders, who are the folks who they have had these conversations with and they’ve had to drive enforcement actions against. They’re gonna go and really start paying attention. And if they’re having these issues again and again and again, I don’t know that it’s a monetary relief that they want from an enforcement standpoint as much as it is a structural change, change it and put the right people in place to make sure that the consumers are being protected and just that all of the right things are occurring from a business standpoint because things are in that we perfect storm and this is it, it’s a ripe time for a consumer to be taken advantage of. You have probably looked at the news and probably have seen time and time again information with regards to an increase in a number of scams with the education system. And you know, with the student loan debt, forgiveness, there’s gonna be a lot of scams that are gonna be occurring. So again, this is where you can’t take your foot off the pedal when, you know, think that you don’t have to do as much compliance. If anything, again, it’s the time to really, really be able to de to demonstrate that you have strong compliance guard rails in place.
Ashley:
Awesome. Great. Okay. Those are all of our predictions. I do wanna just leave some time for you to make any further predictions for 2023 that we may wanna to see coming. We’ve talked about fintechs, banking partners, mortgage, what else can we expect for 2023?
Rhonda:
I would definitely hit again and just say really focusing in and the one, the one that kind of sleeps and nobody really pays attention to is the FTC. Paying attention to what’s happening in the FTC space because they’re really going after, you know, opening up the competitiveness in the industry. And I think there’s a lot of great opportunities for folks to really start paying attention to what’s happening at every level of the government and in various areas of the government. I’ve been paying attention more to FTC because they’ve been having some really good webinars as of late around consumer fraud issues in different areas. So I think that there will be definitely focused as usual on our military, making sure that they’re being taken care of. I would definitely say that the elderly is another area that there will be some focus because there’s a lot of scammers that are out here. I think that there’s gonna probably be some opportunities because if you’re like me, you’ve probably been getting a lot of text messages that are scam text messages lately. So I think there’s gonna be a lot of focus on scammers out there and finding ways to eradicate them, even though they’ll never go away, it’s like playing whac-a-mole.
Ashley:
<laugh> Exactly.
Rhonda:
Get rid of one scam, another one pops up. But that’s gonna be, you know, I think the FTC is taking the consumer education approach and I think CFPB is taking the enforcement approach.
Ashley:
Perfect. Great. All right. Anything else? Any final remarks Rhonda?
Rhonda:
Hmm, I don’t have any final remarks other than those, I think this was a great podcast. I’m so glad to finally get back into the saddle with you after your baby coming. I’m excited, I did miss you dearly. So hopefully this will be the first of us doing many podcasts together.
Ashley:
Of course! I’m excited. It’s always a pleasure to hear from you Rhonda. I know, I appreciate it and so do our listeners.
Thanks for listening to this episode of the COMPLY podcast. I do have one quick plug – if you have not yet had a chance to read our annual Complaint Risk Signal Report I highly recommend you do so – I’ll link to it in today’s show notes. We produce this report annually and it’s an analysis of consumer complaints submitted to the CFPB and the compliance risk signals they present to financial institutions. And as Rhonda was just talking about – there is a section on complaints by military and service members and older consumers as well. So be sure to check that out to learn more and while it’s a look back on complaints from this year it can definitely be used to predict where things are headed in the future. What a perfect wrap-up for today’s session!
For all of the content and events discussed during today’s episode, be sure to check out today’s show notes and as always for the latest content on all things marketing compliance you can head to performline.com/resources.
Thanks again for listening and we’ll see you next time!
Rhonda McGill 
Gianna Kennedy