Today, the CFPB announced its proposals regarding arbitration agreements in consumer financial product contracts. In a move that has plaintiffs’ class action lawyers cheering, the CFPB proposes to require litigation of class claims in court. The CFPB will not ban arbitration of individual actions—at least not yet. Instead, it proposes to require companies to submit claims filed and awards issued for Bureau review and possible publication.
The CFPB’s proposal was issued in conjunction with a field hearing held today in Denver. The proposal states that the CFPB is convening a SBREFA panel, which must provide input within 60 days of convening. The CFPB will then issue its proposed rule for notice and comment. As the CFPB notes in its proposal, the new arbitration rule cannot take effect until at least 180 days after its effective date.
For more background, see our Client Alert on the CFPB’s arbitration study. Stay tuned for in-depth analysis of the CFPB’s proposal.