Credit unions can send feedback on the Consumer Financial Protection Bureau’s (CFPB) proposed rule on arbitration to CUNA through Aug. 12, with comments due to the bureau by Aug. 22. CUNA’s early analysis of the proposal is that it is inappropriate for credit unions and could force credit union members to bypass an efficient, cost-effective dispute resolution process.
The CFPB issued the proposal earlier this month, which would eliminate arbitration clauses that are routinely included in many contracts for consumer financial products. These clauses can protect credit unions from class action lawsuits when requiring arbitration as an alternative dispute resolution process.
Under the proposed rule, financial institutions could still include arbitration clauses for individual disputes, but not for class-actions. The CFPB would provide specific language that must be used in the contract.
The proposal also requires companies that use arbitration clauses to submit claims, awards and other related materials to the CFPB for monitoring. According to the proposed rule, the CFPB intends to publish this material on its website in some form.