The Consumer Financial Protection Bureau’s latest proposed rule has been met with nearly universal scorn by the financial industry. It could soon turn into a legal challenge. Though the open comment period on the so-called arbitration rule ended Monday and the bureau has received thousands of comments, the fight is only heating up. The rule is intended to discourage mandatory arbitration clauses in contracts for credit cards, bank accounts and other financial products that deny consumers the right to sue.
Industry associations have lined up to bash the rule, saying it will encourage more class-action lawsuits against financial institutions that will both increase their costs and lessen the awards consumers can receive in disputes.
Dennis Kelleher, president and CEO of Better Markets, a nonprofit that favors more robust financial regulation, also said he supports the rule, though he wishes it went further toward banning all arbitration clauses rather than just the ones that prohibit class action participation.
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