The Consumer Financial Protection Bureau
(CFPB)’s July 10 Arbitration Agreement rule has
been met with a mixed response. Consumer bodies representing
financial institutions' interests, like the American Bankers
Association (ABA), suggest it puts class action lawyers first
while those representing consumers suggest it’s a
step forward in restoring fairness and balance between
financial institutions and their customers.
The rule prevents banks and financial organisations from
forcing consumers into arbitration, instead allowing them to
band together to form class action lawsuits for minor cases. It
was blocked earlier this week by the house of representatives
under the Congressional Review Act, who voted in favour of H.J.
Res. 111 along almost partisan lines. The rule will now face a
ballot in the senate - a vote that some consider to be a litmus
test for the bureau and its future capacity as a rulemaker.
Oliver Ireland, partner at Morrison &