2

U.S. Market Update

Regulatory/Compliance

Data Trends Impacting Industry

Outlook

2

U.S. Debt Sales - Market Timeline

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

Mill

ion

s

Source: 2006 - 2014 Nilson Reports Credit Card Debt Sales

MORTGAGE BUBBLE BURSTS FINANCIAL CRISIS BEGINS

DELINQUENCIES RISE

BANK LENDING TIGHTENS – ORIGINATIONS DECLINE

CHAPTER 13S REPRESENT 27% OF DEBT SOLD

The Great Recession DELINQUENCIES & CHARGE OFF PLUMMET BUYER CONSOLIDATION BEGINS

CFPB ISSUED ADVANCED NOTICE OF PROPOSED RULEMAKING ON DEBT

COLLECTION

OCC RELEASED ITS BEST PRACTICES DOCUMENT

FOR DEBT SALES

TWO MAJOR SELLERS SIDELINED TO FOCUS ON INTERNAL REGULATORY CHALLENGES & REVAMP

THEIR INTERNAL PROCESS TO MEET OCC & CFPB DEBT SALE

REQUIREMENTS

CHARGE OFFS, DELINQUENCIES & BANKRUPTCY FILINGS AT HISTORIC LOWS.

FURTHER BUYER CONSOLIDATION

U.S Unemployment Rate

4

5

6

7

8

9

10Ja

n-0

5

May

-05

Sep

-05

Jan

-06

May

-06

Sep

-06

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

May

-15

Sep

-15

Source: Federal Reserve

Recession

U.S. Credit Card Delinquency & Charge Off Trends

Source: Federal Reserve

Charge Off Rate Delinquency Rate

Recession

0

2

4

6

8

10

12

20

01

Q1

20

01

Q4

20

02

Q3

20

03

Q2

20

04

Q1

20

04

Q4

20

05

Q3

20

06

Q2

20

07

Q1

20

07

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

10

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

13

Q4

20

14

Q3

20

15

Q2

0

1

2

3

4

5

6

7

20

01

Q1

20

01

Q4

20

02

Q3

20

03

Q2

20

04

Q1

20

04

Q4

20

05

Q3

20

06

Q2

20

07

Q1

20

07

Q4

20

08

Q3

20

09

Q2

20

10

Q1

20

10

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

13

Q4

20

14

Q3

20

15

Q2

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

YTD

Q3

'14

YTD

Q3

'15

20

15

F

Tho

usa

nd

s

CH 13s CH 7s

YTD 2015 Q3 Filings • Down 10.8% vs. YTD Q3 2014 • CH13s were 35.6% of total (up from 32.7%)

• CH 13s down 3.0% • CH 7s down 14.6%

2015 Expected Filings Filings down 11% vs 2014

U.S. Bankruptcy Filings

Consolidation

Source: 2006 and 2014 Nilson Report

In 2005, top 5 made up 60% In 2013, top 5 made up 89%

Top 15 Debt Buyers - Purchases as a % of the Top 15

7

• Arrow

• NCO

• West Asset Management

• Zenith Acquisitions

• Asset Acceptance

• EAF - Hilco

• B-Line

• Precision Recovery

U.S. Debt Sale – Market Pricing Trends

U.S. Debt Sale – Market Pricing Trends

Public Debt Buyers – U.S. Purchases

Purchased ($ in millions)

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013 2014 YTD 2015

ECPG

PRAA

Public Debt Buyers – Global Purchases

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013 2014 YTD 2015

ECPG

PRAA

Purchased ($ in millions)

12

U.S. Market Update

Regulatory/Compliance

Data Trends Impacting Industry

Outlook

12

Regulators

Sellers Driving Change – To be an Approved Buyer

Ongoing Oversight and Access

Contract Commitments

Mandates

► Extended remote & on-site audits

► Deeper due diligence

► Increased buyer certification rigor

► Quarterly calls

► No resale of accounts

► No offshore call centers

► No early legal collections activity

► Clear & complete reps & warrants

► Quality data security and redundancy

► Handling of complaints

► Oversee and manage 3rd party vendors

► Staff and resources dedicated to compliance

Compliance Management System

Compliance Management System (CMS

Board & Management

Oversight

Compliance Program

Consumer Complaints

Review

Compliance Audit

-SETS COMPLIANCE POLICY AND EXPECTATIONS -APPOINTS/ALLOCATES APPROPRIATE RESOURCES -CERTIFY CMS EFFECTIVENESS

-IMPLEMENT POLICIES & PROCEDURES -TRAIN EMPLOYEES -MONITOR & ENFORCE ADHERENCE -TAKE CORRECTIVE ACTION

-RECORD & CATEGORIZE COMPLAINTS -CONFIRM TIMELY RESPONSE -IDENTIFY & ESCALATE POTENTIAL UNFAIR PRACTICES -USE DATA TO DRIVE BUSINESS PRACTICE ADJUSTMENTS

-PROVIDE INDEPENDENT MEASURE OF CMS EFFECTIVENESS -IDENTIFIES SIGNIFICANT GAPS IN POLICIES & STANDARDS

Concepts and information presented were taken from the “Compliance Management Review” section of the CFPB Exam Procedures Manual accessible on the CFPB’s website, www.consumerfinance.gov

16

U.S. Market Update

Regulatory/Compliance

Data Trends Impacting Industry

Outlook

16

Lending Conditions Are Favorable, Beginning to Yield Growth

U.S. Revolving Consumer Credit (Federal Reserve)

2010 2011 2012 2013 2014

Outstanding Balance (in billions) $ 840.0 $ 841.7 $ 846.7 $ 857.6 $ 889.5

Change over prior year -7.6% 0.2% 0.6% 1.3% 3.7%

New Consumer BKs track 90+ Days Delinquent Card Balances

Source: Federal Reserve Bank of New York

0

100

200

300

400

500

600

700

800

900

1,000

$0

$20

$40

$60

$80

$100

$120

Tho

usa

nd

s

Bill

ion

s

Credit Card Delinquent Debt Balance (+90 Days)

Consumers in New Bankruptcies

2005 Change in Bankruptcy Law

What Sellers Want

Provide Highest Value

Execution

Analysis

Lowest Risk

Compliance is key

Seller certification

Customer Focus

Ease to Work With

No surprises

Provide responsive and high quality service