CUNA supports the efforts of lawmakers on a resolution of disapproval for the Consumer Financial Protection Bureau’s (CFPB) arbitration rule that would financial service providers from using pre-dispute resolution agreements to block class action lawsuits. H.J. Res 111, sponsored by Rep. Keith Rothfus (R-Pa.) Thursday, uses Congressional Review Act (CRA) authority to repeal the rule and prevent the CFPB from issuing any similar rule relating to arbitration.
“The CFPB’s arbitration rule is flawed and once again, the bureau refused to recognize the unique size and structure, and inherent consumer protections provided by America's credit unions,” wrote CUNA President/CEO Jim Nussle. “The rule removes an often quicker and less expense alternative dispute resolution process for credit unions and instead encourages costly litigation, which depletes the resources of credit union member-owners. Credit unions and their members are more than capable of resolving disputes without the predatory interference of the plaintiffs’ bar.
“CUNA, the leagues and credit unions support Congressional efforts to have the CFPB create a better rule that enhances consumer protection and encourages the good work of consumer friendly financial service providers such as credit unions, rather than another unnecessary regulation for credit unions,” Nussle added.
The final rule hurts the ability of credit unions to limit class action lawsuits. 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.
The final arbitration rule was published in the Federal Register Wednesday, making its effective date Sept. 18.