Congress blocks CFPB Arbitration Agreement Rule
AML AND COMPLIANCE NEWS |
While the Trump administration has not had much success to date in its promised efforts to repeal Dodd-Frank legislation designed to protect consumers, it did recently halt a new Consumer Financial Protection Bureau (CFPB or Bureau) rule from going into effect, a victory for both the administration and the institutions that are currently limited by the government agency’s rules.
Following a long investigation into the effect on consumers of mandatory arbitration provisions in financial contracts that began in 2012, the CFPB issued a detailed findings report of its investigation in 2015, and a final rule regulating arbitration agreements for specified consumer financial products and services in July 2017. The final rule allowed financial institutions and credit card companies to continue including arbitration clauses in consumer contracts but prohibited agreement terms that would bar consumers from filing or participating in class-action lawsuits. Shortly after, Congress began the joint resolution of disapproval process provided for under the Congressional Review Act (CRA). Within a matter of weeks, the House voted to halt the CFPB’s efforts, and the Senate seconded the decision to repeal the measure in October 2017. The president signed the joint resolution passed by Congress on Nov. 1, 2017, and on Nov. 22, 2017, the Bureau published notice of removal of the rule from the Code of Federal Regulations. Additional Bureau guidance undergoing scrutiny by lawmakers includes payday loans and indirect lending.