The clauses – which appear in the fine print of many contracts for financial products and services – bind customers to try to settle disputes with banks and other financial companies through third-party arbitration instead of litigation. Under the CFPB’s proposed rule, consumers would have the right to sue in some cases.
But Republican members of the House Financial Services Committee worry the rule would only end up enriching class-action attorneys. A committee spokesperson told Legal Newsline that there would be a hearing on the CFPB’s proposal “soon.”
But committee chairman Jeb Hensarling (R-Texas) has already voiced his opposition to the proposed rile, calling it a “big, wet kiss” to trail attorneys.
“Every day, Americans are seeing their liberties slip away as Washington inexorably grows larger, more intrusive, more distant, and more arrogant,” Hensarling said last week. “Nowhere is this more evident than at the CFPB, where its unelected and unaccountable director is vested with the awesome power of the entire United States Congress when it comes to consumer financial products. Today, this de facto dictator has decided to restrict Americans’ ability to resolve financial contract disputes through arbitration. This move – which will apply to some of the most common financial contracts including credit cards, checking accounts, and even cell phones – essentially hands over the keys of the CFPB’s luxury office building to the wealthy, powerful, and politically well-connected trial lawyer lobby.”
Rep. Sean Duffy (R-Wis.), chairman of the committee’s Subcommittee on Oversight and Investigations, has requested that the CFPB turn over information relating to its position on arbitration agreements, including internal and external communications, according to Legal Newsline.
The House Financial Services Committee plans to hold a hearing on the Consumer Financial Protection Bureau’s proposal to limit mandatory arbitration clauses.