Arbitration provides a fair, easy-to-use and efficient means for resolving disputes. Many financial services companies have established arbitration programs to decide customer disputes.
If the US Consumer Financial Protection Bureau ("CFPB" or "the Bureau") has its way, that all will change.
The CFPB is about to issue a rule that, if it goes into effect, will effectively eliminate these arbitration programs. As outlined by the Bureau, the proposed rule—which the Bureau says it plans to issue sometime in the next several weeks—will prohibit arbitration clauses unless the clauses also permit consumers to bring class action lawsuits.
That will inevitably result in the elimination of arbitration in the financial services context.
Here's why.
Originally published on April 13, 2016
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2016. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
