The Consumer Financial Protection Bureau is readying its final rule proposal with an eye on limiting arbitration clauses, in a move that is expected to come on May 5.
The Wall Street Journal reported that the limitation of those clauses would help boost the ability of consumers and clients to sue banks and financial firms.
The CFPB said late last week that it would hold a public hearing on May 5 slated to take place in Albuquerque, New Mexico, to focus on the aforementioned arbitration, and with the debut of the formal proposal, a public commentary period will be opened as well. WSJ also reported that agency Director Richard Cordray will deliver remarks on the proposal and that there will be additional commentary from industry and consumer trade groups.
As has been widely reported, the CFPB issued some facets of the upcoming proposal, which include a ban on financial firms from including arbitration clauses in their contracts that would block the ability of consumers to commence class-action lawsuits. The clauses have, in the past and even now, been tied to a broad range of financial products, including auto loans, payday loans, private student loans and credit cards.
The final rule will be issued later this year after the public commentary period. However, noted WSJ, that rule will not likely be in effect until next year, given the normal time companies are afforded to comply with final mandates is 210 days.
Perhaps not surprisingly, financial services and products companies, and even some members of Congress, as WSJ stated, are arguing that arbitration is actually a relatively faster method of dispute resolution with their consumers.