Earlier this year, California State Senator Bob Wieckowski introduced a bill that would require all California debt collectors to obtain a license from the state’s Department of Business Oversight.

Understandably, this news sent shock waves through the debt collection community, and it was met with a very strong positive reaction from Senator Wieckowski’s constituents.

Because maintaining a license is a normal and accepted part of doing business in most industries, there is a very strong likelihood that this bill could get passed and signed into law in a short amount of time.

If that should happen, what changes would we be likely to see to the California debt collection landscape? Here are the five most obvious answers:

More Protection for Consumers

The most obvious result of a new law requiring licenses for debt collection agencies would be an immediate increase in the level of protection that the state of California would be offering to its residents.

Any form of licensing would come with a clearly defined standard of acceptable business practices that all commercial debt collectors would have to stick to in order to maintain their licenses.

Serious Consequences for Offenders

Having a licensing system in place would also implement serious consequences for any debt collectors who choose to disregard established rules and regulations like those stated in the Fair Debt Collection Practices Act.

While some collections agents choose to step outside the law when it fits their situation today, they would be far less likely to do so if the threat of losing their business license existed.

Less Rogue Debt Collection Agents

With this new law in place, California debt collection agents would be forced to either fall in line with acceptable debt collection practices or risk losing the license to practice their business.

Because of that, it is likely that we would see a dramatic decrease in the number of rogue debt collection agents operating in the state of California.

Fewer Consumer Complaints

As the number of rogue agents decreases and the number of commercial debt collection agents that follow the rules increases, the state is also likely to see fewer consumer complaints regarding the collection practices of those agents.

By having this new licensing requirement in place, California will effectively be reducing the number of consumer complaints that it will need to deal with by eliminating those offending collections agents.

Eventual Industry Consolidation

As the licensing requirements force debt collection agents to follow the rules, the best agents that are known for working with consumers on mutually beneficial arrangements will rise to the top.

At the same time, agents who use pressure tactics will likely find the business to be much less profitable and go into different industries.

This will likely consolidate the collection industry as we know it into a few major operations, which will also make it much easier to regulate.

While forcing debt collection agencies to obtain licenses might initially sound like a bad idea to those agencies, in the long run, it should create opportunities for anyone handling their collections in the right way.