Blocked CFPB rule ‘a gift to class action lawyers’

Author: John Crabb | Published: 28 Jul 2017

The Consumer Financial Protection Bureau (CFPB)’s July 10 Arbitration Agreement rule has been met with a mixed response. Consumer bodies representing financial institutions' interests, like the American Bankers Association (ABA), suggest it puts class action lawyers first while those representing consumers suggest it’s a step forward in restoring fairness and balance between financial institutions and their customers.

The rule prevents banks and financial organisations from forcing consumers into arbitration, instead allowing them to band together to form class action lawsuits for minor cases. It was blocked earlier this week by the house of representatives under the Congressional Review Act, who voted in favour of H.J. Res. 111 along almost partisan lines. The rule will now face a ballot in the senate - a vote that some consider to be a litmus test for the bureau and its future capacity as a rulemaker.

Oliver Ireland, partner at Morrison & Foerster,...