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Wells Fargo has temporarily stopped selling defaulted consumer debts to collections agencies. Its move follows a more drastic pullback by JPMorgan Chase and a regulatory crackdown on the collections industry.
July 28 -
New York financial regulator Benjamin Lawsky has proposed rules that would require improved record keeping and overhaul other practices at banks and third-party debt collectors.
July 25 -
JPMorgan Chase has stopped selling most of its bad loans to third-party collectors in recent months as it braces for regulatory action over its credit card debt collections practices.
July 1
Now that Wells Fargo (WFC) has
Dunlap, who left Wells Fargo in July and started at Flock in early August, directly attributes his decision to change jobs to increased regulatory scrutiny of the collections industry.
"It just seems like regulators are coming down on the space," he said in an interview late Tuesday.
Since Wells Fargo stopped selling bad consumer debt to outside buyers at the end of 2012, Dunlap had been helping the bank try to rethink its debt sales policy and doing some other work in its corporate development group. He called his new job a chance to continue working in the collections industry he loves and to help it react to the quickly changing regulatory environment.
Wells "had stopped [debt sales], I was doing other things. I loved the industry, I thought it was a good time to seek other opportunities," he says.
A Wells Fargo spokeswoman did not immediately have a comment.
Wells and other big banks are rethinking their debt collections practices, as regulators
Last year, Wells quietly stopped selling charged-off consumer debts to outside collections agencies, as it overhauls its practices to make sure they comply with regulators' standards, American Banker
During his 20 years at Wells Fargo, Dunlap "developed procedures and automated systems that streamlined [the bank's] debt sales process," according to a press release issued Tuesday by Flock.
The company's chief executive, Michael Flock, praised Dunlap in the press release for sharing "our vision on how the industry will need to change. He also has the knowledge base and experience to help banks comply with the CFPB and other regulators' expectations."
Dunlap will run sales and relationship management for Flock, and he will help the company's clients find more portfolios of bad debt to buy. Despite the regulatory climate that has frozen debt sales at his former employer, he is even hoping to convince more banks to start working with outside debt collectors.
"There are a number of small and medium-sized banks that have never sold" charged-off consumer debt, he says. "I think some of my expertise could help them and get them to sell, and to stay in the spaces where the regulators would expect them to stay in."