WASHINGTON (11/16/15)--As member-owned not-for-profit institutions, credit unions generally have different, more member-friendly, motivations when resolving member disputes compared with for-profit financial services providers.
That’s what CUNA told the Consumer Financial Protection Bureau’s (CFPB) Small Business Advisory Panel regarding the bureau’s consideration of proposals on arbitration agreements.
“Since credit unions have this unique relationship with members, they are more likely to know their members, and are able to resolve conflicts in a quick and amicable fashion,” CUNA wrote in a recent letter. “Nevertheless, some credit unions choose to use arbitration as an alternative for dispute resolution. The arbitration process can be an important tool for credit unions and credit union members to resolve differences in a fair and efficient manner without engaging in time- and cost-consuming litigation.”
CUNA, which also met with the CFPB Nov. 2 to discuss the proposals, supports fair and conspicuous disclosure of arbitration clauses, and credit unions works to make these disclosures clear to their members.
“When arbitration clauses are used, it can provide the best possible outcome for both credit unions and their members,” the recent CUNA letter reads. “In light of the unique structure credit unions have, transparency and candid communication about how disputes can be resolved is inherent and pertinent.”
Additionally, consumers who participate in arbitration will walk away with the larger part of any damages awarded, as opposed to litigation where attorneys generally fare better, CUNA believes.
CUNA also has concerns with part of the CFPB’s proposal tht suggests an additional public-facing website to track arbitrations, when the Bureau has yet to resolve a number of issues with its complaint database, which is similar.
“Ultimately, we believe the CFPB needs to analyze further some of the opposing research and other available information about positive aspects of arbitration for financial institutions and their customers and members before it moves forward with a rulemaking,” CUNA wrote.