The Consumer Financial Protection Bureau (CFPB) finalized its rule on arbitration Monday, and CUNA is currently analyzing the nearly 800-page final rule. CUNA had urged the bureau to exempt credit unions from the rule, saying it is inappropriate for member-owned financial cooperatives.
“We are analyzing the CFPB’s final rule on arbitration. We are disappointed that the CFPB continues to apply new rules to credit unions when there is no evidence of consumer abuse by credit unions and as financial institutions that are member-owned, credit unions have a long history of working with their members to resolve disputes," said CUNA President/CEO Jim Nussle. "The additional regulatory burden imposed on credit unions in response to abuses by other financial services providers further rigs the regulatory scheme in favor Wall Street banks and other abusers of consumers and does credit union members an incredible disservice.”
The final rule hurts the ability of credit unions to limit class action lawsuits, by banning certain pre-dispute arbitration agreements. It also requires companies to submit to the CFPB certain records about claims, counterclaims and awards issued in arbitration.
CUNA’s most substantial concern with the rule is that it encourages members, against their best interest, to engage in litigation against the institution of which they are a member-owner.
CUNA, in its comment letter on the proposed arbitration rule, also noted that despite heavy regulations credit unions have succeeded as consumer protectors without the intervention of class action lawyers, who are less familiar with members than are credit unions.
Credit unions frequently work with members to provide refunds, work out payment plans, and find other dispute resolutions--often in an efficient, cost-effective manner, CUNA noted.