The Consumer Financial Protection Bureau will likely finalize rules that prohibit financial institutions from implementing arbitration clauses that stop consumers from filing class-action lawsuits before president-elect Donald Trump takes office on Jan. 20.
According to a report in Forbes citing comments that Alan Kaplinsky, leader of the Consumer Financial Services Group for the firm Ballard Spahr LLP, recently made in a trade publication, there’s an 80 percent change the final rule will be on the books prior to Jan. 20.
“The proposed arbitration rule is very simple (unlike the proposed small-dollar loan rule),” he pointed out. “The Obama administration is encouraging all executive agencies to complete as many rules as possible before Jan. 20.”
Forbes noted that the 115th Congress is back in session on Jan. 3.
Wall Street’s arbitration clause was in the spotlight this past November when two Democrat lawmakers who want consumers to be able to sue Wells Fargo in court over the fake account scandal rather than go through private arbitration introduced a resolution. The bill, which was introduced by Senate Banking Committee Ranking Minority Member Sen. Sherrod Brown (D-OH) and Rep. Brad Sherman (D-CA), is dubbed the Justice for Victims of Fraud Act of 2016 and fights back against the mandatory arbitration clauses that prevent customers from joining class-action lawsuits or suing Wells Fargo.
“Forced arbitration is shielding Wells Fargo from being held accountable for tanking customers’ credit scores and charging them fraudulent fines,” said Sen. Brown in a release announcing the bill. “Wells Fargo’s customers never intended to sign away their right to fight back against fraud and deceit. We need to give customers back their ability to seek justice in court so they can be made whole again.”
In late November, Wells Fargo filed a motion asking a judge in U.S. District Court in Utah to order customers suing the bank to resolve their issues via arbitration.