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This week, Members of Congress from both the House and Senate sent a letter to CFPB Director Richard Cordray expressing several concerns with the Bureau’s recently proposed regulation on arbitration agreements in consumer financial agreements. The letter urged the Bureau to develop alternative proposals that would “preserve access to efficient mechanisms for resolving consumer disputes.”
The Members of Congress expressed concerns that the proposal would make it more difficult and expensive for consumers to resolve disputes through litigation. The letter highlighted problems with the CFPB's data collection efforts, and noted that findings of the study conflict with the CFPB's proposed rule. The letter argues that the CFPB's study fails to show that the rulemaking is in the public interest and for the protection of consumers. Furthermore, it notes that the proposed rule likely does not satisfy the requirements in the Administrative Procedure Act.
The letter also expressed concern for consumers, since the proposed rule would likely for them into the slower and more expensive legal system, which would primarily benefit class actions lawyers, rather than consumers. More specifically, the Members pointed out that the federal regulatory process permits CFPB to modify its current approach by re-proposing this rule, or issuing an advanced noticed of proposed rulemaking.
We appreciate the support of these 140 members, who recognize that rules not narrowly tailored to address specific abuses can actually harm consumers. One of our main concerns with the proposal is that frivolous class action litigation harms credit unions and their members. Furthermore, diverting resources to legal costs rather than member services, jeopardizes the ability of consumers to access the high-quality and affordable products that credit unions provide.We sent our own letter to the CFPB last week regarding the proposed changes to the arbitration process.
These arbitration letters follow a July letter from Sasse and Sen. Joe Donnelly (D-Ind.), which had the signatures of 70 senators, that called for CFPB to tailor rulemakings to protect credit unions from regulatory burden. A similar message with 329 signatures was delivered by Reps. Adam Schiff (D-Calif.) and Steve Stivers (R-Ohio), leading to a supermajority of Congress supporting the bureau’s use of its exemption authority.
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Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
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ADA Compliance Notice & Legal