HFSC subcommittee to examine CFPB arbitration proposal
The Consumer Financial Protection Bureau’s (CFPB) recent proposal on arbitration will be examined by the U.S. House Financial Services subcommittee on financial institutions and consumer credit Wednesday. The hearing, titled “Examining the CFPB’s Proposed Rulemaking on Arbitration: Is it in the Public Interest and for the Protection of Consumers?” is scheduled to begin at 2 p.m. (ET).
The CFPB’s proposal, released earlier this month, would effectively eliminate pre-dispute arbitration and require financial institutions to insert language into their arbitration agreements reflecting this limitation.
CUNA is seeking feedback from credit unions about the proposal, but an initial assessment shows that it’s inappropriate for credit unions because they are member-owned, not-for-profit financial cooperatives with different dispute resolution incentives compared with for-profit institutions. CUNA is concerned that the CFPB is taking away a tool for dispute resolution, which could increase the amount of frivolous class action litigation credit unions are facing.
CUNA witnesses presented the credit union perspective at two field hearings conducted by the CFPB on arbitration.
Earlier this month, at a hearing timed in conjunction with the proposal’s release, CUNA witness Kevin Hammar of Aldridge, Hammar, Wexler & Bradley P.A. said the proposal continues the unfortunate “one-size-fits-all” approach to regulation from the CFPB.
An October 2015 field hearing featured another CUNA witness: John Ruby, senior vice president and chief lending officer at Bellco CU, Greenwood Village, Colo.
Ruby said that credit unions are accountable to members, the true owners of a credit union, making it critical that credit unions provide “an overall experience that causes our members to choose us for their financial services products,” which includes how credit unions conduct business with members.
The hearing will be streamed live on the committee’s website.