The Consumer Financial Protection Bureau’s contentious final rule on arbitration agreements is scheduled to go into effect soon, and it looks like Congress won’t be able to stop it. According to American Banker, “[t]he [finance] industry has been counting on a Republican-controlled Congress to strike down the CFPB’s rule using the Congressional Review Act, but as lawmakers recessed for an August break last week, the prospects for overturning the rule are uncertain.”
The rule is scheduled to become effective on September 18th, with a compliance date of March 19th, 2018. Lawmakers have 60 legislative days to pass legislation rescinding the rule, but with so many other debates (including health care, tax reform, and the debt ceiling) currently at play in Congress—and John McCain, a key Republican voter, at least somewhat out of commission—the chances of stopping the CFPB by next month appear slim.
The rule would ban certain contract language financial institutions use to protect themselves against class action lawsuits. As a result, consumers would have greater opportunity to bring costly litigation against financial service providers.
Regardless of their stance on the rule or their hopes for its eventual outcome, organizations should take the time between now and March to update their compliance programs in light of the new regulation. For more information and guidance, click here.