National Credit CounselingDomestic credit advice
The research says that (1) the absence of finance training - expenditure schedules, credit managements and saving - is the main cause that people do not economize for pension; (2) cash concerns hamper people's work effort; and (3) ease of staff entry into core finance training programmes enhances their individual finance behaviour and work effort as well as employers' outcomes.
Legislative development on the horizon for credit advisory firms
In view of the upcoming year 2010, it is timely to examine new legislative changes on the horizon and a number of expected future developments, both of which should be closely monitored by any credit bureau. Subsequently, we identified several suggested and definitive regulation measures and other legislative developments of relevance to CRAs.
Now that the ten-year period is drawing to a close, it is obvious that credit rating firms are in a new phase of uptake. The sector is well placed to offer consumer access to key and sought-after consumer service offerings as a credit and budgetary advisor, residential property advisor, insolvency advisor and provider of finance expertise.
But if the tendency persists, one can look back on the second half of the century and acknowledge the period as one in which the work of the credit consultancies really became a recognised and acceptable part of the solution of consumers' pecuniary problems. It is a significant achievement which has certainly been accompanied by a great deal of heavy work by agents and their consultants.
It would have been inconceivable just a few years ago to commend and assist the credit advisory firms, which are now received in records by individual persons and governmental organisations. You will remember that the outcome was a hearing in Congress, the Internal Revenue Service ("IRS") regulatory initiatives, public regulatory authorities hurrying to deposit and settle draft public debts managers ("DMPs"), and the attentiveness of individual claimants attempting to take advantage of the service offered to customers in difficulty, regardless of the nature of the company that provides the service.
Manufacturers and agency teams had to work harder to adjust to these challenging situations. Well, the variety of credit agencies' service offerings makes them well positioned to meet the needs of their local authorities and the wider public; the variety of service offerings means that new consumer demographic developments can be supported.
A number of consultancies offer several kinds of advice and take full benefit of the various government-sponsored and subsidized programmes in collaboration with local governments and NGOs to maximise the number of customers facing their services. However, changes in the way credit and debts are treated have also led to new possibilities.
Over the next ten years, the key will be to go beyond the past and meet today's demands while maintaining the delivery of essential and responsive consumer needs. While there may be further delays, each release will have an effect on the suppliers of advice on insolvency and training (and possibly also on insolvency administrators).
Meanwhile, the credit bureaus and creditor advisors are governed by the interim financial regulation of 5 July 2006 until the respective definitive regulation enters into force. See ere Informationen finden Sie unter Erust Issues debtor or educational Notice of proposed Rulemaking, verfügbar unter http://www.venable. com/eous issues-debtor-educationnotice- of proposed-rulemaking-11-15-2008/ ; US Trustee Program Beginnt Genehmigungsverfahren für Credit Counseling Agencies nach New Bankruptcy Law, verfügbar unter http://www.venable.
Under the Federal Trade Commission's ('FTC' or'Commission') regulation scheme, FTC employees expect to submit to the Commission a proposal on the changes suggested to the Telemarketing Sales Rule ('TSR') to deal with the sales of debt-relief service by April 2010. Changes to the TSR were published on 30 July 2009.
The changes, as suggested, would address a wide variety of service areas, including: profit-oriented credit advisors; credit regulators who pledge to receive a much lower flat-rate payment of consumers' bills; and credit brokers who provide interest rates cuts or other relief on lower consumer spending per month. Suggested changes would not directly affect good faith non-profit organisations, but the adopted norms can provide a new standard by which others will be guided.
Suggested changes would: clarify the concept of remission of debts servicing; make sure that remission of debts servicing telesales operations are governed by the TSR regardless of the original advertising media; require certain disclosure and forbid misrepresentation in the remission of debts servicing telesales; and forbid any company to require or receive payments for remission of debts servicing until such servicing has been fully provided and recorded to the customer.
Further information can be found at FTC Hosts Public Forum on proposed amends to the TSR, available at http://www.venable. On the basis of their settlement schedule, the FTC officials expected the Commission to announce by the end of 2009 a notification of the suggested rule adjustments for both (1) support service for loans and (2) support service for loan files and practice (although these now appear to be postponed to 2010).
It would not cover good faith non-profit organisations (at least now on the basis of the FTC's present competence status), but the regulations will affect the environment for mortgage-related advisory activities and are likely to set a standard for disclosure and other protection measures.
The U.S. Department of Housing and Urban Development ("HUD") issued the long-awaited Proposal Rule on December 15, 2009, which sets the minimal requirements states must satisfy in order to satisfy the requirements of the German Securities and Exchange Commission's SAFE Act of 2008 when granting licenses to lenders.
It would also contain explanations and interpretation of the SAFE Act which HUD has previously made available to the general public in the form of a publicly available commented comment. The important explanations suggested by this provision include what constitutes an "application for a home loan" and an "offer or negotiation of the conditions of a home loan" and what it means to do so "against payment or profit".
" To a large extent, the meaning of these concepts determines whether a particular person is required to obtain approval for the granting of State loans - comprising mortgages administrators, credit amendment officers and home advisors. However, HUD considers these concepts by and large in the suggested norm, and to this day some state legislation (and the state regulatory authorities that interpret it) takes a stricter stance.
Further information can be found at HUD Seeks' Note on SAFE Mortgage Licensing Act Responsibilities, available at http://www.venable. com/hud-seeks-comment on-safemortgage- licensing-act-responsibilities-housing-counselors in-the-crosshairs-12-22- 2009/. Congress is currently reviewing a number of draft laws that would review the regulation of finance companies and finance operations. These include the establishment of a Agency for Consumers' Rights to deal with the protective issues of consumer finance related issues, which would include credit advice.
An Obama administrator favorite Obama draft of the proposed legislation, the Consumers Finance Protection Agency Act, was barely adopted by the House in the autumn of 2009. As well as providing consumers with access to finance goods and retail banking solutions, the House release would enhance the FTC's regulatory power and enhance consumers' ability to make money. As yet, nothing has been carved in stone, but the nationwide regulations on credit advisory centres (independent of non-profit character and exemption from taxes) are a good option if one of the present suggestions is accepted.
The credit counseling firms for decades were regulated by a maze of state statutes and statutes. A number of states in 2009 thought about and adopted new or amended legislation to govern credit advisory services. Yet, practically across the board, all these changes were designed to broaden the scope of credit counseling agencies' settlement and debt managment plans providers. What's more, the new rules are intended to be more flexible and more flexible.
The Uniform Debt Management Services Act will also come into force in Nevada and Tennessee in July 2010. Moreover, over two dozen states have passed legislation to foreclose mortgages advisors and all states have passed legislation to govern lending. Whilst the IRS credit advisory auditing process is likely to be completed by the beginning of the next decade, it is likely that the Internal Revenue Code (the "Code") will be enforced by the IRS and its intensive review of credit advisory services.
Bets are high for credit bureaus recognised as exempted under Code Section 501(c) (3). In particular, this is now the case with the sharp rise in consumer spending on home advice and various state subsidies, practically all of which 501(c)(3) must be tax-exempt. The maintenance of tax-exempt status has become crucial to the viability of many credit advisory firms.
Before 2008, we were not familiar with any IRS investigations by credit rating firms that led to an evaluation of interim penalties, although many well publicised cases of poor performers received overperformance. Over the last year, however, we have seen that the IRS has proposed the evaluation of interim penalties in several investigations, some of which have led to "no change" notifications.
In addition, the IRS has not restricted the evaluations suggested to cases where the amount is clearly inflated, but we have seen that the service has suggested penalties for operations with inflated benefits of only $700 and others that have passed million dollar. Therefore, companies should remain vigilant in their dealings - to include the pro-active use of remuneration surveys to determine in advance what the value of management remuneration and other payment to unqualified individuals will be - and consider conducting a " mock IRS auditing " to avoid surprise in any subsequent real IRS review.
Consumer claims, as well as collective claims accusing credit rating firms of cheating customers, remain a source of risks and are likely to increase. No wonder, when the credit advisory agency's service goes beyond pure budgeting and credit advice, there are new areas of concern that the plaintiff's lawyers will identify. Sectors such as credit enhancement and partitioning in connection with advisory service and reversal mortgages residential advisory have become as well known as the DMP.
Meanwhile, traditionally focused issues such as cases dealt with under the Credit Reparatur Organizations Act ("CROA") and state credit reform laws are likely to persist. Although CROA and other laws should obstruct plaintiffs' attempts at collection to the point that the credit bureau (which does exactly what it should be doing) is exempted because of its non-profit nature, powerful Compliance programmes, appropriate cover and best practice can help minimise these hazards and eventually help the plaintiff overcome a personal claim.
Whilst trends in this area may alter in the course of the year and may be influenced by a number of different issues, notably the pro-active representation of interests of industries at both national and state level, credit rating firms should take a break and consider how they might be affected in the year ahead.
At the same time, changes on the horizon could mean possible further adaptations of the legislative and regulatory frameworks for credit advisory firms and new possibilities.