Credit union concerns with the Consumer Financial Protection Bureau’s (CFPB) arbitration rule were highlighted in an op-ed appearing last week in the Juneau Empire. Dan McCue, senior vice president of corporate administration for Alaska USA FCU, Anchorage, Alaska, and member of the government affairs committee of the Alaska Credit Union League, penned the op-ed.
“For credit union members, the results of class-action litigation are even worse since it essentially means that the resources of all of that credit union’s members is moved to a small pool of members (or even nonmembers), with plaintiffs’ attorneys taking their cut in-between,” McCue wrote. “At a credit union, each member with an account is also an owner — an owner that has pooled his or her resources with fellow owners. This means all the financial resources of the credit union is money that belongs to all its members. Therefore, members are directly affected by any negative monetary impact, especially regarding any costly legal matters.”
McCue adds that removing the ability to limit class action litigation is harmful to consumers, and cites the CFPB’s own findings, and a recent settlement in a Ticketmaster lawsuit that ended up with very little remuneration received by affected consumers.
This removal, he notes, is especially inappropriate for credit unions.
“Should a dispute between a credit union and a member arise, the credit union’s structure as a not-for-profit, member-owned financial cooperative provides numerous ways to quickly and amicably resolve the dispute,” McCue said. “While credit unions are less likely to enforce an arbitration clause, it can be an important resource to protect the equity built by and owned by the credit union’s members.
A rule banning the ability to use arbitration doesn’t make sense for any credit union member across this state,” he adds.
CUNA has expressed many concerns about the CFPB’s arbitration rule, and supports a Congressional Review Act repeal of the rule. The House passed its resolution to repeal the rule in July, and CUNA has urged the Senate to pass its resolution.