What changed in this filing

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Item 1. Business

2023-02-22 compared with 2022-02-23 · 89 added, 100 removed, 354 unchanged (35% of the section changed)

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and its domestic affiliates (collectively, “MCM”) we are a market leader in portfolio purchasing and recovery in the United States.

Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”) we are one of the largest credit management services providers in Europe and a market leader in the United Kingdom.

These are our primary operations.

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In June 2013, we completed our merger with Asset Acceptance Capital Corp., which was another leading provider of debt recovery solutions in the United States.

In July 2013, by acquiring a majority ownership interest in the indirect holding company of CCM, Janus Holdings S.à r.l., we acquired control of CCM.

In July 2013, by acquiring a majority ownership interest in the indirect holding company of CCM, we acquired control of CCM.

In February 2014, CCM acquired Marlin Financial Group Limited, a leading acquirer of non-performing consumer debt in the United Kingdom.

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In March 2016, we completed the divestiture of our membership interests in Propel Acquisition LLC and its subsidiaries, our tax lien business.

In November 2017, CCM strengthened its debt servicing offerings with the acquisition of Wescot Credit Services Limited (“Wescot”), a leading U.K.

contingency debt collection and BPO services company.

In November 2017, CCM completed the acquisition of Wescot Credit Services Limited (“Wescot”), a leading UK contingency debt collection and BPO services company.

In July 2018, we completed the purchase of all of the outstanding equity of CCM not owned by us.

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We believe that success in our business depends on our ability to establish and maintain an information and data advantage.

Leveraging an industry-leading financially distressed consumer database, our in-house team of statisticians, business analysts, and software programmers have developed, and continually enhance, proprietary behavioral and valuation models, custom software applications, and other business tools that guide our portfolio purchases.

Leveraging our database of financially-distressed consumers, our in-house team of statisticians, business analysts, and software programmers have developed, and continually enhance, proprietary behavioral and valuation models, custom software applications, and other business tools that guide our portfolio purchases.

We have been able to leverage over 20 years of data, insights, modeling and operational experience.

Each year we invest significant capital to purchase credit bureau and customized consumer data that describe account level and macroeconomic factors related to credit, savings, and payment behavior.

Each year we purchase significant amounts of credit bureau and customized consumer data that describe account level and macroeconomic factors related to credit, savings, and payment behavior.

This robust data accumulation from our collection channels and other sources supports our direct mail, call center and digital collection efforts and our market-leading proprietary scorecards for legal placements.

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In developing our digital platform, we have allowed consumers to access account information, supporting documents and perform payments online.

By leveraging direct mail, email and search engines we have bolstered data accumulation and collections payments through our digital platform.

Innovation and investment in digital collection technology and speech analytics have enhanced our ability to collect and enabled us to quickly adapt to the varying operating conditions resulting from the COVID-19 pandemic, as they provide real-time insights that help optimize our interaction with consumers, as well as valuable information for training purposes.

By leveraging direct mail, email, text messaging and search engines, we have bolstered data accumulation and collections payments through our digital platform.

Innovation and investment in digital collection technology and speech analytics have enhanced our ability to collect and have enabled us to quickly adapt to changes in our operating environment, as they provide real-time insights that help optimize our interaction with consumers, as well as valuable information for training purposes.

Consumer Intelligence and Principled Intent.

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We expect to continue to invest in infrastructure and processes that support consumer advocacy and financial literacy while promoting an appropriate balance between corporate and consumer responsibility.

At the core of our analytic approach is a focus on characterizing our consumers’ willingness and ability to repay their financial obligations.

At the core of our analytic approach is a focus on understanding our consumers’ willingness and ability to repay their financial obligations.

In this effort, we apply tools and methods from statistics, economics, and management science across the full extent of our business.

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Subsequently, the expectations for each account are aggregated to arrive at a portfolio-level liquidation model and a valuation for the entire portfolio is determined.

During the collection process, we apply a number of proprietary operational frameworks to match our collection approach to an individual consumer’s payment behavior.

During the collection process, we apply a number of proprietary operational frameworks to match our collection approach to an individual consumer’s predicted payment behavior.

Our data collection practices and analytics processes are designed with consumer experience in mind.

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Both the U.S.

and UK markets have established regulatory systems and compliance requirements, benefiting scaled market participants such as Encore.

Issuers of consumer debt sell charged-off receivables to a select universe of trusted buyers, further necessitating a robust compliance and regulatory framework.

and UK markets have established regulatory systems and compliance requirements, which benefit scaled market participants such as Encore.

Issuers of consumer debt sell charged-off receivables to a select group of trusted buyers, further necessitating a robust compliance and regulatory framework.

As the cost of compliance increases, economies of scale are important to the provision of cost effective credit management services.

Our established regulatory framework uniquely positions us to capture new portfolios and realize cost-efficiencies.

Our established regulatory framework positions us well to capture new portfolios and realize cost-efficiencies.

Although MCM and Cabot both operate in developed and established credit markets, fundamental differences exist between the two from the standpoint of the regulatory approach being followed.

environment is governed by a rules-based approach which details specific rules on how the company should conduct operations when interacting with consumers.

environment is governed by a rules-based approach that details specific rules on how the company should conduct operations when interacting with consumers.

The UK landscape is principles-based in nature;

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Many credit providers seek to do business with credit management companies that provide consistent, compliant and consumer-focused services to protect the credit provider’s own reputation.

Encore’s established regulatory and compliance programs are a key differentiator that enables the Company to successfully and efficiently demonstrate its expertise to credit providers.

Encore’s established regulatory and compliance programs are a key differentiator that enables the Company to demonstrate its expertise to credit providers.

MCM has achieved certification from all major U.S.

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We also experience considerable cost advantages stemming from our scale and focus on collecting in a cost-efficient manner.

Our operations in India and Costa Rica have been critical to achieving these efficiencies.

Competitive Advantage.

We strive to enhance our competitive advantages through innovation, which we expect will result in collections growth and improved productivity.

To continue generating strong risk-adjusted returns, we intend to continue investing in analytics and technology, risk management and compliance.

We will also continue investing in initiatives that enhance our relationships with consumers, expand our digital capabilities and collections, improve liquidation rates on our portfolios or reduce costs.

Our operations in India and Costa Rica contribute to achieving these efficiencies.

Market Focus.

We continue to concentrate on our core portfolio purchasing and recovery business in the U.S.

markets, where scale helps us generate our highest risk-adjusted returns.

and the UK markets in an effort to generate our highest risk-adjusted returns.

We believe these markets have attractive structural characteristics including:

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In addition, we are strengthening our presence in Spain, France, Portugal and Ireland, each of which we believe shares a number of these same attractive market characteristics.

Competitive Advantage.

We strive to enhance our competitive advantages through innovation, which we expect will result in collections growth and improved productivity.

To continue generating strong risk-adjusted returns, we intend to continue investing in analytics and technology, risk management and compliance.

Balance Sheet Strength .

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Furthermore, we believe our global funding structure enhances access to capital markets and provides us with financial flexibility, particularly with respect to our ability to allocate capital to our markets with the best risk-adjusted returns.

Depending on the capital markets, we consider additional financings to refinance debt or fund our operations and any potential acquisitions.

Our Priority Framework

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Once we have determined the estimated value of the portfolio and have completed our qualitative due diligence, we present the purchase opportunity to our investment committee, which either sets the maximum purchase price for the portfolio based on an Internal Rate of Return (“IRR”), or declines to bid.

Members of the investment committee vary based on the type, amount, IRR and jurisdiction of the purchase opportunity, but include our Chief Executive Officer and Chief Financial Officer for all material purchases.

We believe long-term success is best achieved by combining a diversified asset sourcing approach with an account-level scoring methodology and a disciplined evaluation process.

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Currently consumers can access their account information, view supporting documents and make payments through our website.

We leverage direct mail, email, and search engines to promote our digital channel to our consumers.

We leverage direct mail, email, text messaging, and search engines to promote our digital channel to our consumers.

Account managers in our call centers are also encouraged to make consumers aware of our digital channels including our website.

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If placed to our internal legal channel, attorneys in that channel will evaluate the accounts and make the final determination whether to pursue legal action.

If referred to our network of retained law firms, we rely on our law firms’ expertise with respect to applicable debt collection laws to evaluate the accounts placed in that channel in order to make the decision about whether or not to pursue collection litigation.

Prior to engaging an external law

firm (and throughout our engagement of any external law firm), we monitor and evaluate the firm’s compliance with consumer credit laws and regulations, operations, financial condition, and experience, among other key criteria.

If referred to our network of retained law firms, we rely on our law firms’ expertise with respect to applicable debt collection laws to evaluate the accounts placed in that channel in

order to make the decision whether or not to pursue collection litigation.

Prior to engaging an external law firm (and throughout our engagement of any external law firm), we monitor and evaluate the firm’s compliance with consumer credit laws and regulations, operations, financial condition, and experience, among other key criteria.

The law firms we hire may also attempt to communicate with the consumers in an attempt to collect their debts prior to initiating litigation.

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Collection agencies receive a contingent fee based on amounts they collect on our behalf.

Generally, we use these agencies when they can generate more collections than our internal call centers or can do so at a lower cost.

Generally, we use these agencies to service specialized account segments for which they can generate more collections than our internal call centers or can do so at a lower cost.

We strive to use our financial resources judiciously and efficiently by not deploying resources on accounts where the prospects of collection are remote based on a consumer’s situation.

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For the consumers that do not respond to our calls, emails or our letters we must then decide whether to pursue collections through legal action.

Throughout our ownership period of accounts, we periodically refine our collection approach to determine the most effective collection strategy to pursue for each account.

We periodically refine our collection approach to determine the most effective collection strategy to pursue for each account.

Cabot (Europe)

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Where contact is made and consumers indicate both a willingness and ability to pay, we create tailor-made payment plans to suit the consumer’s situation.

In doing so, we utilize U.K.

regulatory protocols to assess affordability and ensure their plan is fair, balanced and sustainable.

In doing so, we utilize UK regulatory protocols to assess affordability and ensure their plan is fair, balanced and sustainable.

Where we identify consumers with an ability to pay but who appear to be unwilling to pay their debt due, we pursue a range of collections strategies, which may include litigation processes in order to stimulate engagement and enable us to agree to a suitable plan.

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Again, scoring is used to vary the intensity of contact effort, mirroring the likelihood of a consumer’s financial situation having changed.

In the event that a consumer breaks their plan, segmentation is used to tailor the communication and contact intensity as we seek to re-engage with the consumer and understand the reason for the break.

In the event that a

consumer breaks their plan, segmentation is used to tailor the communication and contact intensity as we seek to re-engage with the consumer and understand the reason for the break.

By understanding the reason for the break we can tailor the solutions we recommend to rehabilitate the plan and put the consumer back on the path to financial recovery.

In this way, we have built strong relationships with our consumer base with a robust repayment stream, reflected in exceptional customer service scores.

In this way, we have built strong relationships with our consumer base, reflected in exceptional customer service scores.

Debt Servicing

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and an opportunity to support clients across the collections and recoveries lifecycle, thereby allowing us to remain close to evolving trends.

MCM (United States)

While seasonality does not have a material impact on our business, collections are generally higher in the first three calendar quarters and are the slowest in the fourth calendar quarter.

Relatively higher collections for a quarter can result in a lower cost-to-collect ratio compared to the other quarters, as our fixed costs are relatively constant and applied against a larger collection base.

The seasonal impact on our business may also be influenced by our purchasing levels, the types of portfolios we purchase, and our operating strategies.

In addition, seasonality could have an impact on the relative level of quarterly earnings.

In quarters with stronger collections, total costs are higher as a result of the additional efforts required to generate those collections.

Since revenue for each pool group declines steadily over time, in quarters with higher collections and higher costs ( e.g., the first three calendar quarters), all else being equal, earnings could be lower than in quarters with lower collections and lower costs ( e.g., the fourth calendar quarter).

Additionally, in quarters where a greater percentage of collections come from our legal and agency outsourcing channels, cost to collect will be higher than if there were more collections from our internal collection sites.

Cabot (Europe)

While seasonality does not have a material impact on European operations, in the years preceding the COVID-19 pandemic collections were generally strongest in the second and third calendar quarters and slower in the first and fourth quarters, largely driven by the impact of the December holiday season and the New Year holiday, and the related impact on consumers’ ability to repay their balances.

This drove a higher level of payment plan defaults over this period, which were typically repaired across the first quarter of the following year.

The August vacation season in the United Kingdom also had an unfavorable effect on the level of collections, but this was traditionally compensated for by higher collections in July and September.

Following the start of the COVID-19 pandemic there has been more variability in quarterly collections and the impact of seasonality has been more difficult to predict.

Customer payment patterns in the countries in which we operate can be affected by dynamics that occur on a seasonal basis including income tax refunds, holiday spending habits and certain employment trends.

Collections in the United States have historically tended to be somewhat higher in the first three calendar quarters than in the fourth calendar quarter.

Compliance and Enterprise Risk Management

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Our first line of defense consists of business lines or other operating units, whose role is to own and manage risks and associated mitigating controls.

line of defense is comprised of strong legal, compliance, and enterprise risk management functions, who ensure that the business maintains policies and procedures in compliance with existing laws and regulations, advise the business on assessing risk and strengthening controls, and provide additional, related support.

Our second line of defense is comprised of strong compliance and enterprise risk management functions, who ensure that the business maintains policies and procedures in compliance with existing laws and regulations, advise the business on assessing risk and strengthening controls, and provide additional, related support.

These second-line functions facilitate oversight by our management and Board of Directors and are responsible for promoting compliance with applicable laws and regulations, assisting in formulating and maintaining policies and procedures, and engaging in training, risk assessments, testing, monitoring, complaint response, compliance audits and corrective actions.

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We strive to utilize best of breed technologies throughout our business from our core collection platforms and decision engines to our enterprise wide predictive dialer capability.

Using these industry leading platforms in conjunction with certain company-specific integrations, provides us with an overall solution that enables us to both interact with consumers in their preferred manner, such as telephone calls, SMS, email, web chat, etc., as well as monitor such consumer interactions for compliance with applicable rules and regulations.

Using these industry leading platforms in conjunction with certain company-specific integrations, provides us with an overall solution that enables us to both interact with consumers in their preferred manner, such as telephone calls, texts, email, web chat, etc., as well as monitor such consumer interactions for compliance with applicable rules and regulations.

Process Control.

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We invest in technologies to protect our organization and consumer and proprietary data throughout its life cycle.

We believe that our adoption and implementation of leading security frameworks and certifications demonstrate our commitment to protecting consumer information and our enterprise.

We believe that our adoption and implementation of leading security frameworks and certifications

demonstrate our commitment to protecting consumer information and our enterprise.

To ensure the integrity and reliability of our environment, we periodically engage outside specialists to examine and test our systems, technical posture as well as our detection and response capabilities, including our disaster recovery plans.

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Government Regulation

There have been various governmental actions taken, or proposed, in response to the COVID-19 pandemic, such as limiting debt collection efforts and encouraging or requiring extensions, modifications or forbearance, with respect to certain loans and fees.

In addition, in certain jurisdictions courts have closed and/or government actions have affected the litigation process.

Government actions have not been consistent across jurisdictions and the efficacy and ultimate effect of such actions is not known.

We continue to monitor federal, state and international regulatory developments in relation to COVID-19 and their potential impact on our operations.

MCM (United States)

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• Fair Credit Reporting Act (“FCRA”) and the CFPB’s Regulation V

• Health Insurance Portability and Accountability Act

• Federal Trade Commission Act (“FTCA”)

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• Foreign Corrupt Practices Act

• Health Insurance Portability and Accountability Act

The Dodd-Frank Act was adopted to reform and strengthen regulation and supervision of the U.S.

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The CFPB has broad authority to prevent unfair, deceptive, or abusive acts or practices by issuing regulations or by using its enforcement authority without first issuing regulations.

State Attorneys General and state financial regulators have authority to enforce the CFPA’s general prohibitions against unfair, deceptive, or abusive acts or practices, as well as state-specific prohibitions against unfair or deceptive acts or practices.

State Attorneys General and state financial regulators also have authority to enforce the CFPA’s general prohibitions against unfair, deceptive, or abusive acts or practices, as well as state-specific prohibitions against unfair or deceptive acts or practices.

Additionally, the FTCA prohibits unfair and deceptive acts or practices in connection with a trade or business and gives the FTC enforcement authority to prevent and redress violations of this prohibition.

The Dodd-Frank Act also gave the CFPB supervisory and examination authority over a variety of institutions that may engage in debt collection, including us.

Accordingly, the CFPB is authorized to supervise and conduct examinations of our business practices.

The prospect of supervision has increased the potential consequences of noncompliance with federal consumer financial law.

The CFPB can conduct hearings, adjudication proceedings, and investigations, either unilaterally or jointly with other state and federal regulators, to determine if federal consumer financial law has been violated.

The broad authority of these regulators has increased the potential consequences of noncompliance with federal consumer financial law.

The CFPB’s authority enables it to conduct hearings, adjudication proceedings, and investigations, either unilaterally or jointly with other state and federal regulators, to determine if federal consumer financial law has been violated.

The CFPB has authority to impose monetary penalties for violations of applicable federal consumer financial laws (including the CFPA, FDCPA, and FCRA, among other consumer protection statutes), require remediation of practices, and pursue enforcement actions.

The CFPB also has authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), costs, and monetary penalties ranging from $5,000 per day for ordinary violations of federal consumer financial laws to $25,000 per day for reckless violations and $1 million per day for knowing violations.

The CFPB has been active in its supervision, examination and enforcement of financial services companies, including bringing enforcement actions, imposing fines and mandating large refunds to customers of several financial institutions for practices relating to debt collection practices.

The CFPB and the FTC continue to devote substantial attention to debt collection activities, and, as a result, the CFPB and the FTC have brought multiple investigations and enforcement actions against debt collectors for violations of the FDCPA and other applicable laws.

The CFPB has been active in its supervision of, and examination and enforcement activities related to, financial services companies generally, including bringing enforcement actions, imposing fines and mandating large refunds to customers of several financial institutions for various practices.

The CFPB and the FTC continue to devote substantial attention to the debt collection industry, and have brought multiple investigations and enforcement actions against debt collectors for alleged violations of the FDCPA and other applicable laws.

Continued regulatory scrutiny by the CFPB and the FTC over debt collection practices may result in additional investigations and enforcement actions against the debt collection industry.

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Additionally, we are subject to ancillary state Attorney General investigations related to similar debt collection practices.

For example, in 2018, we entered into settlement agreements with the Attorneys General of 42 U.S.

states and the District of Columbia in connection with our debt collection and litigation practices.

In October 2020, the CFPB issued final rules in the form of a new Regulation F to implement the Fair Debt Collection Practices Act, which rules restate and clarify prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.

The rules included provisions related to, among other things, the use of newer technologies (text, voicemail and email) to communicate with consumers and limits relating to telephonic communications.

In December 2020, the CFPB also issued an additional debt collection final rule focused on consumer disclosures.

This final rule amends Regulation F to provide additional requirements regarding validation information and disclosures provided at the outset of debt collection communications, prohibit suits and threats of suits regarding time-barred debt, and identify actions that must be taken before a debt collector may report information about a debt to consumer reporting agencies.

The rules became effective on November 30, 2021.

Based on our assessment of the rules, we believe that the new rules will not have a material incremental effect on our operations.

In addition, the CFPB has issued guidance in the form of bulletins on debt collection and credit furnishing activities generally, including one that specifically addresses representations regarding credit reports and credit scores during the debt collection process, another that focuses on the application of the CFPA’s prohibition of unfair, deceptive, or abusive acts or practices on debt collection and another that discusses the risks that in-person collection of consumer debt may create in violating the FDPCA and CFPA.

We have entered into various settlement agreements with the Attorneys General of certain U.S.

states in connection with our debt collection and litigation practices.

In November 2021, the CFPB final rules in the form of a new Regulation F that implement the Fair Debt Collection Practices Act became effective.

Regulation F restates and clarifies prohibitions on harassment and abuse, false or misleading representations, and unfair practices by debt collectors when collecting consumer debt.

The rules included provisions related to, among other things, the use of newer technologies (text, voicemail and email) to communicate with consumers, limits relating to telephonic communications, consumer disclosures and credit reporting.

In addition, the CFPB has issued guidance in the form of bulletins, interpretive rules, and advisory opinions on debt collection and credit furnishing activities generally, including those related to:

• representations regarding credit reports and credit scores during the debt collection process;

• the application of the CFPA’s prohibition of unfair, deceptive, or abusive acts or practices on debt collection;

• the risks that in-person collection of consumer debt may create in violating the FDPCA and CFPA;

• the scope of state attorney generals’ enforcement authority under the CFPA and the FCRA;

• the collection of fees associated with certain accounts.

The CFPB also accepts debt collection consumer complaints and released template letters for consumers to use when corresponding with debt collectors.

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Our activities are also subject to federal and state laws concerning identity theft, data privacy, and cybersecurity.

The Gramm-Leach-Bliley Act and its implementing regulations require us generally to protect the confidentiality of our consumers’ nonpublic personal information and to disclose to our consumers our privacy policy and practices, including those regarding sharing consumers’ nonpublic personal information with third parties.

The Gramm-Leach-Bliley Act and its implementing regulations, including the new FTC “Safeguards Rule,” require us generally to protect the confidentiality of our consumers’ nonpublic personal information and to disclose to our consumers our privacy policy and practices, including those regarding sharing consumers’ nonpublic personal information with third parties.

In addition, the FCRA requires us to prevent identity theft and to securely dispose of consumer credit reports.

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The applicable regulatory framework for privacy and cybersecurity issues is evolving and uncertain.

For example, the California Consumer Privacy Act (“CCPA”), which became effective January 1,

2020, imposes more stringent requirements on certain businesses with respect to California data privacy.

The CCPA includes provisions that give California residents expanded rights to access and delete certain personal information, opt out of certain personal information sharing, and receive detailed information about how certain personal information is used.

For example, the California Privacy Rights Act (“CPRA”), which became operative on January 1, 2023 and amends and expands the California Consumer Privacy Act (“CCPA”), imposes more stringent requirements on certain businesses with respect to consumer and employee data privacy in California.

These laws include provisions that give California residents and employees expanded rights to access and delete c ertain personal information, opt out of certain personal information sharing, and receive detailed information about how certain personal information is used.

Compliance with any new or developing privacy laws in the United States, including any state or federal laws, may require significant resources and subject us to a variety of regulatory and private sanctions.

In addition to the federal statutes detailed above, many states have general consumer protection statutes, laws, regulations, or court rules that apply to debt purchasing and collection.

In a number of states and cities, we must maintain licenses to perform debt recovery services and must satisfy ongoing compliance and bonding requirements.

It is our policy to comply with all material licensing, compliance and bonding requirements.

In a number of states and cities, we must maintain licenses to perform debt collection activities and must satisfy ongoing compliance and bonding requirements.

It is our policy to comply with all applicable licensing, compliance and bonding requirements.

Our failure to comply with existing requirements, changing interpretations of existing requirements, or adoption of new requirements, could subject us to a variety of regulatory and private sanctions.

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and monetary relief, including restitution, damages, fines and/or penalties.

In addition, failure to comply with state licensing and compliance requirements could restrict our ability to collect in regions, subject us to increased regulation, increase our costs, or adversely affect our ability to collect our receivables.

State laws, among other things, also may limit the interest rate and the fees that apply to our consumers’ accounts, limit the time in which we may file legal actions to enforce those accounts, and require specific account information for certain collection activities.

By way of example, the California Fair Debt Buying Practices Act that directly applies to debt buyers, applies to accounts sold after January 1, 2014.

The law requires, among other things, debt buyers operating in California to have in their possession specific account information before debt collection efforts can begin.

Moreover, the New York State Department of Financial Services issued debt collection regulations, which took effect in September 2015, that established requirements for collecting debt in the state.

In addition, failure to comply with state licensing and compliance requirements could restrict our ability to collect in certain states, subject us to increased regulation, increase our costs, or adversely affect our ability to collect our receivables.

State laws may also, among other things, limit the amounts we may garnish from a consumer in enforcing a judgement, limit the ways in which we can contact a consumer, limit the time in which we may file legal actions, and require specific account information for certain collection activities.

By way of example, Washington D.C.

passed the “Protecting Consumers from Unjust Debt Collection Practices Amendment Act of 2021” which went into effect January 2023.

The law, among other things, requires both debt buyers and debt collectors operating in Washington D.C.

to have in their possession specific account information before debt collection efforts can begin and has contact limitations more restrictive than the CFPB.

In addition, other state and local requirements and court rulings in various jurisdictions may also affect our ability to collect.

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The FCA Handbook sets out the FCA rules and other provis ions.

Firms wishing to carry on regulated consumer credit activities must comply with all applicable sections of the FCA Handbook, including “Treating Customers Fairly” principles, as well as

the applicable consumer credit laws and regulations.

Firms wishing to carry on regulated consumer credit activities must comply with all applicable sections of the FCA Handbook, including “Treating Customers Fairly” principles, as well as the applicable consumer credit laws and regulations.

The FCA also publishes guidance on various topics from time to time that it expects firms to comply with.

In the context of the COVID-19 pandemic, the FCA has made it clear by way of its guidance to consumer credit and debt management firms that it expects such firms to adjust policies and lending and collection practices as necessary to accommodate customers that continue to experience financial difficulties as a result of the COVID-19 pandemic.

The FCA has app lied its rules to consumer credit firms in a number of areas, including its high-level principles and conduct of business standards.

In December 2021 the FCA published the Consumer Duty, which aims to provide a higher level of consumer protection in retail financial markets and combines existing consumer treatment requirements with enhanced standards.

It is expected that the FCA will establish the final rules of the new Consumer Duty in July 2022.

In July 2022, the FCA published its new Consumer Duty, which aims to provide a higher level of consumer protection in retail financial markets and combines existing consumer treatment requirements with enha nced standards by requiring firms to act to deliver good outcomes for customers.

Implementation of the new requirements is required by July 2023.

The FCA has significant powers and , as the FCA deepens its understanding of the industry through continued supervision , it is likely that the regulatory requirements applicabl e to the debt purchase industry will continue to increase via requirements such as the Consumer Duty.

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the conditions for obtaining consent to process personal data;

transparency and providing information to individuals regarding the processing of their personal data;

transparency and

providing information to individuals regarding the processing of their personal data;

enhanced rights for individuals;

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Cabot Financial (Ireland) Limited is authorized by the Central Bank of Ireland under Part V of the Central Bank Act 1997 as amended by the 2015 Act as a Credit Servicing Firm.

As a result, Cabot Financial (Ireland) Limited is subject to the Central Bank of Ireland’s supervisory and enforcement regime and is subject to various regulatory consumer protection codes.

Cabot Financial (Ireland) Limited was already obligated to ensure compliance with these codes through its contractual agreements to service loans on behalf of various Irish financial institutions and is audited on a regular basis against such obligations.

The Central Bank of Ireland also maintains a register of key senior managers and has powers to act where individuals fail to meet the required standards of conduct.

These powers are due to be further strengthened with the introduction of an enhanced regime in 2022 (SEARs – Senior Executive

Accountability Regime), this is expected to align to the UK SMCR and widen accountability and the nature of action that can be taken where the required standards are not achieved.

In June 2016, the United Kingdom held a referendum in which voters approved the United Kingdom’s withdrawal from the European Union, commonly referred to as “Brexit.” The United Kingdom formally exited the European Union on January 31, 2020 although an agreement was not reached until the end of the allocated transition period in December 2020.

Even though an agreement has been reached there remains a significant lack of clarity over the terms of the United Kingdom’s future relationship with the European Union in certain key areas including Financial Services, where a temporary additional transition period has been assigned while negotiations continue.

The full impact of Brexit is still emerging and could, among other outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European Union, undermine bilateral cooperation in key policy areas and significantly disrupt trade between the United Kingdom and the European Union.

As a result, Cabot Financial (Ireland) Limited (“CFI”) is authorized as a Credit Servicing firm with the Central Bank of Ireland (“CBI”), which means that it is subject to the provisions of Irish financial services law and consumer protection codes, and is within the CBI’s supervisory and enforcement regime.

CFI also provides credit servicing and collection activities to various other financial institutions, and in the provision of such services, is also required to ensure compliance with these codes through its contractual agreements.

CBI also maintains a register of pre-approved controlled functions within CFI and has powers to act where individuals fail to meet the required standards of conduct.

These powers are due to be further strengthened with the introduction of the Individual Accountability Regime (“IAF”) in 2023, which is expected to align to the UK’s SMCR.

The IAF will introduce common standards for staff, a senior executive accountability regime for individuals occupying prescribed functions, enhance the CBI’s current fitness and probity regime and create a unified enforcement process to sanction any breaches of the conduct standards.

The EU-UK Trade and Cooperation Agreement – a key agreement that governs the relationship after Brexit – entered into force in May 2021.

During 2022 negotiations on the future partnership continued with an aim to improve the clarity on post-Brexit positions on trade arrangements and cross-border investments.

Talks between the UK and the EU continue on how to implement post-Brexit arrangements.

Nevertheless there remains ongoing risks resulting from a lack of clarity, which could potentially undermine bilateral cooperation and disrupt trade (including in the financial services sector) between the UK and the EU.

In October 2021 the Non Performing Loan Directive (“NPL Directive”) was approved by the European Council with the implementation period commencing in December 2021.

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Implementation of the NPL Directive is required by December 31, 2023.

Several EU countries have opened consultation on transposing the EU NPL Directive.

In addition, the other markets in which we currently operate (including Spain, France, Italy and Portugal) are subject to local laws and regulations, and we continue to review the required risk and compliance programs to facilitate compliance with applicable laws and regulations in those markets.

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Human Capital Management

As of December 31, 2021, we had 6,604 employees, of which approximately 20% were in the United States and 80% were in our international locations.

As of December 31, 2022, we had approximately 6,900 employees, of which approximately 18% were in the United States and 82% were in our international locations.

We have no employees in North America represented by a labor union or subject to the terms of collective bargaining agreements.

We have employees in Spain and the United Kingdom who are represented by collective bargaining agreements.

We have employees in Spain, France and the United Kingdom who are represented by collective bargaining agreements.

We believe that our relations with our employees in all locations are positive.

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Commitment to Values and Ethics

We hold our employees to the highest ethical practices and decision making as guided by our Standards of Business Conduct (the “Standards”), which embody Encore’s Mission, Vision and Values, provide guidance on specific behaviors, and set the foundation for ethical decision making.

Our Standards reflect our commitment to operating in a fair, honest, responsible and ethical manner and provide direction for reporting complaints in the event of alleged violations of our policies (including through our Employee Compliance Hotline).

We are committed to ensuring fundamental human rights across our business and in each region.

In 2022, we published a Global Human Rights Policy that outlines our commitment to respect and promote human rights in accordance with internationally recognized human rights standards.

This policy details our actions concerning human rights, such as providing fair and competitive compensation, benefits and hours to our colleagues, freedom of association and collective bargaining, and our zero-tolerance policy for harassment and discrimination.

We also hold our employees to the ethical practices and decision making as guided by our Standards of Business Conduct, which embody Encore’s Mission, Vision and Values, provide guidance on specific behaviors, and set the foundation for ethical decision making.

Our Standards of Business Conduct reflect our commitment to operating in a fair, honest, responsible and ethical manner and provide direction for reporting complaints in the event of alleged violations of our policies (including through our Employee Compliance Hotline).

Diversity and Inclusion

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We also provide competitive benefits that include comprehensive health and welfare insurance, generous time-off and leave, and programs such as Employee Assistance Program, paid time off for volunteering activities, and wellness incentives to support the health and mental well-being of our employees.

In response to the global COVID-19 pandemic, we implemented programs and services that we determined were in the best interest of our employees, their families, our consumers and business partners, as well as the communities in which we operate.

These include continued work-from-home arrangements for a majority of our eligible employees, reimbursement of certain home office related expenses, enhanced information technology (IT) support, backup childcare, enhanced medical insurance coverage, activities and programs supporting mental health, and regular communications and updates to employees.

Growth and Development

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business