The Consumer Financial Protection Bureau recently proposed a new rule that would restore access to the justice system for many consumers harmed by the financial industry. The proposed rule is promulgated pursuant to the CFPB’s regulatory power under the Dodd-Frank Act, and contains two key provisions: (1) it would prohibit mandatory arbitration and class-action waivers in consumer contracts with covered financial service providers and (2) it would require disclosure of arbitration records, creating greater transparency in the system.
Mandatory arbitration and class-action waivers are common tools used by banks, credit card companies, and insurance companies to prevent consumers from seeking justice in the courts when they have been harmed by misconduct in the financial industry. The text of the proposed rule is available here. More coverage of this issue is available at the New York Times and the Huffington Post.