CFPB Bans Arbitration Clauses
On July 10th, the Consumer Financial Protection Bureau (CFPB) issued a 775 page rule banning companies, including financial institutions, from using mandatory arbitration clauses. Arbitration clauses often state that either the consumer or the company can require arbitration of disputes, with the exception of individual cases brought in small claims court. The arbitration clauses can be used by companies to block class action lawsuits. The rule is effective 60 days after it is published in the federal register and applies to contracts entered into more than 180 days after that.
http://files.consumerfinance.gov/f/documents/201707_cfpb_Arbitration-Agreements-Rule.pdf
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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