The Consumer Financial Protection Bureau is expected on May 5 to release a proposal that would allow consumers to band together in class action lawsuits even if there is an arbitration agreement.
The use of arbitration clauses is widespread in contracts on credit cards, deposit accounts, payday loans and a host of products. Companies have imposed mandatory arbitration agreements largely to shield themselves from class action lawsuits, consumer groups claim.
The banking industry fiercely opposes restrictions on arbitration agreements claiming efforts to limit their use will aid the plaintiff's bar.
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In what has become almost a grim ritual, Consumer Financial Protection Bureau director Richard Cordray faced a barrage of hostile questioning from Republican members of the House Financial Services Committee, who hammered him over everything from payday lending to regulatory relief for small banks.
March 16
On Thursday, the CFPB said it plans to hold a public hearing on May 5 in Albuquerque, N.M., where the bureau's director, Richard Cordray will discuss arbitration agreements.
In October, the bureau issued a draft proposal that would prevent the use of such agreements and require companies to submit details about arbitration agreement filings and rewards to the bureau.
Some industry lawyers have said the draft proposal amounted to a de facto ban on arbitration agreements.
