On July 10, 2017 the CFPB issued its final rule which limits financial institutions’ ability to utilize arbitration agreements. The rule prohibits the compulsory waiver of class action suits via pre-dispute arbitration agreements. The rule takes effect on September 18, 2017 but compliance is not mandatory until on or after March 19, 2018. Institutions should review consumer deposit, credit card, and loan agreements as pre-dispute arbitration agreements are quite common. It may be necessary for institutions to update these documents manually or to contact providers to determine if these forms are available without the pre-dispute language. If an institution is to retain allowable types of pre-dispute arbitration agreements, such agreements must now contain new model language and require submission of certain arbitration records to the CFPB. See the CFBP’s page for further guidance here.
While the House passed a resolution on July 26, 2017 to override the arbitration rule, there is no word from the Senate on an impending vote. We will provide updates on any changes of the status of these rules.