Banking groups are fearful that the Consumer Financial Protection Bureau is going to be writing tough new rules that would restrict the use of arbitration clauses. This, despite promises by CFPB officials that a study on the issue was strictly "preliminary."

The Bureau recently released its report finding that arbitration clauses commonly placed in contracts by lenders for credit cards and other financial products often put consumers at a disadvantage. Officially, the Bureau said only that the report merited further study, but industry observers said the way in which the CFPB presented the data signaled more action is forthcoming.

Alan S. Kaplinsky, Practice Leader of Ballard Spahr's Consumer Financial Services Group, told American Banker: "The CFPB seems to be setting the stage for a rulemaking which will likely not be favorable to the industry. While they claim not to be prejudging the ultimate outcome, their findings seem to be
designed to support a conclusion that arbitration is inhibiting consumers from vindicating their rights and that class actions are necessary. That is certainly how the consumerists are viewing things at this point."

Related Practice

Consumer Financial Services