CUNA strongly opposes any legislation that would expand the Fair Debt Collection Practices Act (FCDPA) to first-party debt collectors, it wrote to the House Financial Services Committee Wednesday. CUNA’s letter notes and that the collection of debt payments from borrowers is critical to the safety and soundness of any lending institution.
“Expanding the scope of the FDCPA to creditors could disrupt creditors’ ability to actively manage their lending portfolios, increase the cost of credit and reduce access to credit,” the letter reads. “Therefore, credit unions would strongly oppose any bill that would expand the scope of the FDCPA to cover creditors collecting their own debts, and we urge the committee to reject such legislation.”
The letter details how Congress limited the scope of the FCDPA to third-party collectors in recognition that a creditor-borrower relationship depends on maintaining goodwill long after the debt payment process has been concluded. This dynamic has not changed, CUNA says.
“The limited scope of the FDCPA carries added significance when considering credit union members’ structure as not-for-profit financial cooperatives. In contrast to a bank or other for-profit lender whose shareholders have the ultimate interest in the repayment of debts, credit unions’ stakeholders are their members who have the ultimate interest in ensuring the credit union can take appropriate steps to collect debts owed by their fellow members,” the letter reads.
“After all, credit union members will pay the cost of uncollected debts as well as the cost of debt collection practices through higher interest rates on loans, lower rates on savings and higher fees on products and services,” it adds.