January 22, 2019

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Financial services stress levels at highest since crash

The number of stress-related absences in financial services is higher now than in the immediate aftermath of the 2008 financial crisis.

The number of working days lost per worker per year in financial services because of stress is now 31% higher than the average between 2007 and 2010, employment law specialist Fox & Partners has found in an analysis of Health and Safety Executive figures.

Between 2007 and 2010 the number of working days lost was 0.48 on average, rising to 0.63 days between 2015 and 2018.

The increase in days lost, found Fox's report, is a reflection of how workers have come under continued pressure from redundancies, restructuring programmes and increased regulatory burdens.

For example, the introduction of MiFiD II (Markets in Financial Instruments Directive) in January 2018 has weighed on the profitability of smaller brokerage firms, putting some jobs at risk.

MiFiD, along with the Financial Services Act, is in part a response to the crash and provides more protection for consumers in terms of transparency over fees, charges and communication.

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CFPB seeking compliance authority on military lending

Bureau asks Congress for "clear authority to supervise" military lending compliance

The Consumer Financial Protection Bureau is changing course on its previous decision to stop supervising lending to active duty service members.

Kathy Kraninger, the recently confirmed director of the bureau, sent a letter to Congress on Thursday, asking for "clear authority" to supervise for compliance with the Military Lending Act.

This turnaround comes several months after Mick Mulvaney, who served as acting director of the CFPB prior to Kraninger's confirmation, decided that the bureau would stop supervising lending made to active duty service members. Much to the dismay of congressional Democrats, who pushed the CFPB to retain oversight.

Under Mulvaney's changes, the CFPB relied solely on complaints from service members and their families to trigger investigations. Mulvaney had reportedly expressed that the bureau had overstepped its authority by proactively looking into cases against military members without receiving complaints. Read more at HOUSING WIRE

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With Many Just A Paycheck Away From Financial Ruin, Employers And FinTech Can Help

If there's one thing that's been made clear by the longest government shutdown in history, it's that financial resilience in America is in dangerously short supply. People don't tend to talk about their financial problems, but government workers who have just missed their first payday are taking to the airwaves and sharing details of their financial struggles - the missed rent payment, the empty gas tank, the stress and the shame. The Federal Reserve data that nearly half of all Americans couldn't come up with $400 in an emergency is well known; the shutdown has now given the statistic a face.

It's easy to forget that the single largest employer in the U.S. is the federal government. Including state and local governments, the public sector employs more than 21 million people. All employers have both a responsibility and a business imperative to provide their employees with more than just a paycheck. Because when their workers experience a financial shock, a paycheck is not a sufficient contingency plan. The lack of resilience that results from living paycheck to paycheck has a ripple effect, reducing both workplace productivity and demand, and creating downward pressure on the overall economy.

The death of the social contract between employers and workers has been decried for years, the result of an interpretation of capitalism that sacrifices everything else for the primacy of shareholder value. The crisis brought on by the federal government shutdown should be a wake-up call to renew that contract for the 21st century, with fintech as an important partner. Read more at FORBES

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How Banks Can Turn Millennials Into Lifelong Customers

Smart banks know that the future generation of growth depends on a very specific group of consumers - Millennials.

As a group, Millennials are lost at sea when it comes to managing their personal finances, with 34 percent reporting they are unsatisfied with their current financial situation, and over 60 percent burdened by debt.

Unfortunately, while Millennials need the support of financial institutions and leaders, this generation has traditionally shown disdain for big banks, and a skepticism about financial wellness in general. Only 27 percent of Millennials have sought professional financial advice in the last five years, and four of the leading banks were ranked by Millennials as a least loved brand.

But while Millennials may have little interest in personal banking today, as this audience grows and matures, so will their financial needs. For example, 90 percent of Millennials expect to be impacted by a major financial event within the next 36 months - such as taking on a student loan, or buying a home or car. Only 8 percent believe they have the high levels of financial literacy needed to deal with these life events.

As Millennials experience increased levels of financial complexity, they will need somewhere to turn, giving banks an opportunity to shine - or get left behind, as new competitors enter the space in droves. Read more at FORBES

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Shutdown is starting to hurt Trump's financial deregulation agenda

WASHINGTON (Reuters) - The U.S. government shutdown over President Donald Trump's call for Congress to fund a wall he promised to build on the U.S.- Mexican border is threatening another campaign pledge to make rules easier to navigate for banks and corporations.

The partial shutdown, sparked by a standoff between Democrats and Republicans over how to address Trump's demand, is already the longest ever, entering its 27th day on Thursday with no signs of a resolution.

The Trump administration has outlined plans to ease bank rules, overhaul corporate governance, and boost financial innovation, sparking hopes among executives that they would already start to feel the benefits this year.

Yet with Democrats now in control of the House of Representatives and the 2020 presidential campaign expected to stymie policymaking, industry lobbyists worry the shutdown will further limit the narrow window for the new rules to kick in.

Of particular concern is the fate of rules being penned by regulators to implement changes, passed by the Republican Congress last May, that relaxed restraints imposed on banks after the financial crisis, said lobbyists and regulatory sources. Read more at YAHOO FINANCE

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MINNESOTA federal court decision is warning to lead generators

A Minnesota federal district court recently ruled that lead generators for a payday lender could be liable for punitive damages in a class action filed on behalf of all Minnesota residents who used the lender's website to obtain a payday loan during a specified time period. An important takeaway from the decision is that a company receiving a letter from a regulator or state attorney general that asserts the company's conduct violates or may violate state law should consult with outside counsel as to the applicability of such law and whether a response is required or would be beneficial.

The amended complaint names a payday lender and two lead generators as defendants and includes claims for violating Minnesota's payday lending statute, Consumer Fraud Act, and Uniform Deceptive Trade Practices Act. Under Minnesota law, a plaintiff may not seek punitive damages in its initial complaint but must move to amend the complaint to add a punitive damages claim. State law provides that punitive damages are allowed in civil actions "only upon clear and convincing evidence that the acts of the defendants show deliberate disregard for the rights or safety of others."

In support of their motion seeking leave to amend their complaint to add a punitive damages claim, the named plaintiffs relied on the following letters sent to the defendants by the Minnesota Attorney General's office:

An initial letter stating that Minnesota laws regulating payday loans had been amended to clarify that such laws apply to online lenders when lending to Minnesota residents and to make clear that such laws apply to online lead generators that "arrange for" payday loans to Minnesota residents." The letter informed the defendants that, as a result, such laws applied to them when they arranged for payday loans extended to Minnesota residents. Read more at NATIONAL LAW REVIEW

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Pawn Shops, Payday Lenders Benefit From Gov't Shutdown

The partial government shutdown, which is now in its fourth week with no sign of ending, is helping out at least two industries: pawn shops and payday lenders.

The Financial Times reported that pawnshop chains and payday lenders are seeing a huge jump in their business thanks to the government shutdown that has left 800,000 unpaid or furloughed. Without income coming in, some of the hundreds of thousands of government workers are turning to pawns shops and payday lenders to help them get by. The Financial Times pointed to South Carolina-based World Acceptance for one example. Since the shutdown the stock is up 22 percent. Chad Prashad, chief executive of World Acceptance, told The Financial Times that the company is seeing increased demand in Texas and the Southeast, two areas where airports employ government workers. To address the shutdown, World Acceptance is offering deferrals on loans without interest or fee penalties. New customers are allowed to borrow up to $1,250 in a ten month loan with zero interest and no fees, reported the FT. "Because we lend in our communities, face to face, we see the concerns first hand and have decided to help directly," Prashad said, noting after natural disasters such as hurricanes and tornadoes it offered the same promotions to victims.

Meanwhile EZ Corp., which operates a pawnshop in Austin, Texas, has seen its stock climb 20 percent since the closure of the government. Investors appearing to be betting on an increase in demand for their services as the government shutdown continues, becoming the longest in modern day history. "Many people . . . are reaching into savings and looking for short-term liquidity if they need to pay the mortgage or something else," said Michael Underhill, chief investment officer at Capital Innovations, in an interview with the FT. "Alternative lending platforms have likely stepped into the void." Read more at PYMNTS.COM

Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

Get to the bottom of things with skip tracing software. by Philip Burgess

The daily lives of private investigators, while envisioned with great creativity by plenty of truly talented writers and film directors, are most often dominated by tasks unknown to those who know it entirely from its depictions in pop culture. Individuals who find fulfillment in the profession focus their efforts intensely on doing each aspect of their job with great efficacy.

Skip tracing stands out prominently as a frequent assignment of modern private investigators and bounty hunters - a term that sounds much more ominous on paper than it usually is in practice. This task - finding people who don't want to be found for any number of reasons, not infrequently financial obligations - relies upon the ingenuity, patience and hard work of dedicated professionals. (When those requirements are considered as a combination of tasks, it's often referred to as "legwork" by those in the business) Investigators also lean heavily on a variety of specialized tools, including skip tracing software from Microbilt.

In particular, it's important for small businesses to be aware of this technology so that they can be prepared if they were to ever require such services. Here, we'll delve into the essential tenets of skip tracing, how it has evolved through the years and its most essential modern uses, as well as how skip tracing software specifically aids those who ply the trade of people-finding.
Read more at MICROBILT

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Editorial: VIRGINIA needs to rein in payday lenders
The Virginian-Pilot Editorial Board

FOR YEARS, those who care about struggling people have been trying to tackle the problem of payday lending in Virginia.

And for years, unscrupulous loan companies have pumped money into the pockets of many other politicians to secure their help in heading off real change.

Whenever there's a threat to their usury, the loan companies come up with new ways to take advantage of the many Virginians who have a tough time making it from paycheck to paycheck or who are thrown into a downward spiral by an unexpected expense.

The financial bind is bad enough, but sometimes the problems spread, affecting the borrower's ability to care for a family or hold a job. This is a pressing matter in Hampton Roads, where lenders' victims often include young, inexperienced sailors and soldiers. Read more at THE VIRGINIAN-PILOT

Lending as a Service

Strike the Right Balance Between Fighting Fraud and CX: Four Findings

Fraudsters continue to innovate and improve their techniques, making it challenging for companies to identify and fast track "good" customers. As consumers increasingly use digital channels, they expect seamless, safe and fast interactions with businesses.

In a recent webinar, we discussed how financial services companies view the fight against fraud. A guest speaker from Forrester joined us to share the findings of a study of 153 financial services leaders in the U.S., Canada and India.

Here are four major findings from the webinar and study:

1. Fraudsters are one step ahead of financial institutions
Fraudsters have distinct advantages over lenders in the fraud battle: Fraudsters don't have to maintain compliance, and they only have to get it right once. Lenders face greater risks as fraud affects their profitability, reputation and compliance. Financial institutions have to follow Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, among others, but fraudsters can constantly evolve their tactics.

The study, commissioned by TransUnion and conducted by Forrester Consulting, found that almost 70% of financial services firms agree that fraudsters are always one step ahead, leaving firms unsuspecting of the latest threats.

2. Financial institutions are detecting more loan stacking, new account and card-not-present fraud Read more at TRANSUNION

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The Government Shutdown Shines a Light on Americans' Poor Savings Habits, Research Shows

450,000 federal employees are working without pay during the longest-ever government shutdown in U.S. history.
Many federal employees who live paycheck-to-paycheck are struggling to make ends meet.
Research shows Americans need to prepare their finances for the shutdown to last indefinitely.
The federal government has been shut down since Dec. 22, 2018, and there is no end in sight. The shutdown is poised to continue into its fifth week and has already become one of the most expensive shutdowns in history.

The main sticking point in the government shutdown is funding for Trump's border wall with Mexico. Considering Democrats won't give Trump funding for the wall and Republicans won't reopen the government without it, the shutdown seems like it will go on indefinitely. Currently, 450,000 federal employees are working without pay and that number could go up as Trump recalls IRS employees to handle tax returns, reports ABC News.

During this shutdown, one important thing has been clear: Many federal employees don't have the savings needed to pay for their housing, cars and more.

Many Americans Don't Have the Savings Needed to Survive the Government Shutdown
What is the most practical lesson Americans should take away from the shutdown? That it's absolutely necessary to have an emergency fund.

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

Marketplace Lending News Roundup - January 19, 2019

During the week I share the latest marketplace lending and fintech news on Twitter as it happens. Then every Saturday I take the most interesting news items and blog posts from the past week and share them here.

Fintech firms want to shake up banking, and that worries the Fed from Reuters - There is no consensus at the Federal Reserve on how to deal with fintech. Some at the Fed recommend a more cautious approach while others want to embrace fintech.

The new FinTech bank from Chris Skinner's Blog - The main difference between traditional banks and new fintech banks is the level of integration of the finance and technology operations. In traditional banks these groups remain siloed.

Alibaba taps Kabbage to loan up to $150K to SMBs after it quietly acquired OpenSky to ramp in North America from TechCrunch - The world's largest e-commerce company, Alibaba, has teamed up with Kabbage to offer point of sale loans to its U.S. customers. Quite the coup for Rob Frohwein and his team.

CFPB to scrap key underwriting portion of payday rule from American Banker - Good news for the payday lending industry but bad news for consumers as the CFPB plans to scrap a key provision in a new rule that required lenders to take into account a borrower's ability to repay.
Read more at LEND ACADEMY

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