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House Financial Subcommittee to Review Arbitration Proposal
Tuesday, May 17, 2016 6:35 AM

The Consumer Financial Protection Bureau’s recent proposal on arbitration will be examined by the U.S. House Financial Services subcommittee on financial institutions and consumer credit Wednesday, May 18.

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 1 p.m. (CT). The hearing will be streamed live on the committee’s website. 

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.