Banks need to have standardized, trackable financial correspondence to meet regulatory requirements for records retention and prove compliance with rules for collecting on debt.
The Fair Debt Collection Practices Act provides rules for the collection of many types of consumer debt, while there are specific rules for mortgage foreclosure covered under Consumer Financial Protection Bureau rules. Both require that credit providers and collectors follow certain rules for correspondence with debtholders during the collection process and that they be able to produce records of that correspondence when requested.
Traditional document storage and recovery procedures aren’t adequate to do the job. As discussed in the white paper Best Practices and Risks in Mortgage Collateral Document Management, mortgage lenders and servicers said that the retention, storage and retrieval of records (including documents, letters and other correspondence) are major challenges. As with mortgages, auto loans and other consumer loans are often made by one financial institution and serviced by another financial services provider, making it cumbersome to track various customer communications.
The financial services providers themselves often don’t have systems in place for reliable collection, storage and retrieval of customer correspondence and other records. Nor do they have the scalability to grow their internal records retention resources as new documents and correspondence are added to these files. Therefore, it can be advantageous to work with a trusted records management provider that can accurately restore and retrieve customer correspondence and other records in a timely manner, if doing so is needed to demonstrate regulatory compliance.
The partner should have redundant backup systems so that if one goes down due to a power outage or any other reason, records can be retrieved from other systems. Additionally, data deduplication and automated, secured data destruction systems will ensure that financial services providers aren’t storing or spending time searching through documentation that is no longer needed or required by law, while maintaining needed trackable financial correspondence and other records.
By engaging a trusted records management partner, financial institutions can demonstrate compliance and lower risk. In the ever-changing world of financial services regulation, it’s a good idea to dot your i’s and cross your t’s through careful retention of correspondence.