CUNA and the Independent Community Bankers of America strongly urged members of the Senate to support a resolution that would nullify the Consumer Financial Protection Bureau’s (CFPB) rule on arbitration. The House passed its resolution to nullify the rule, which would restrict the use of arbitration agreements, in July.
“For many community financial institutions, arbitration is a practical alternative to costly and interminable class action litigation,” the letter reads. “Class action suits serve the interest of trial lawyers at the expense of consumers who receive paltry settlements and community financial institutions who face exorbitant legal fees.”
The letter goes on to note that the bureau failed to heed the findings of its own report on the subject when constructing the rule.
“In the cases reviewed in the CFPB report, class members received a little over $32 on average in class actions that took nearly 2 years," the letter reads. "In arbitration proceedings, the CFPB found that the average award to a prevailing consumer was approximately $5,400 and settlements were generally reached within 5 months.”
The letter concludes by stating the loss of arbitration as a viable option would fuel continued industry consolidation and ultimately, reduced consumer choice.