Many have been troubled by the recently announced Consumer Financial Protection Bureau (CFPB) rule regarding arbitration agreements. The rule states that providers of certain consumer financial products and services are prohibited from using arbitration agreements as well as those who are already involved in an arbitration case to submit records to the Bureau. The CFPB proposed the rule to help consumers, who otherwise couldn't file a class-action lawsuit against banks, to be able to do so. However, last Tuesday, the House voted to repeal. Many felt the rule was another example of the CFPB's abuse of power. Mike Crapo (R-Idaho), House Financial Services Committee Chairman, said it was "incumbent on Congress to vote to overturn [the] rule".
In the mix of those concerned is Keith Noreika, Acting Comptroller of the Currency. Though his office is only in the beginning stages of reviewing the CFPB’s data regarding the Final Rule, his original concerns regarding the ruling are still ever present when it comes to the ways it could adversely affect federal banking systems and their customers.
“The Final Rule prevents banks from using an effective risk mitigation tool and will eliminate one option consumers have to resolve their concerns without the cost and delay of litigation,” Noreika said. “Ultimately, the rule may have unintended consequences for banking customers in the form of decreased availability of products and services, increased related costs, fewer options to remedy consumer concerns, and delayed resolution of consumer issues.”
According to Noreika, this rule is the proverbial “straw on the camel’s back”.
“It is important that the OCC economists take the time necessary to conduct their independent review of the data and analysis used to support and develop the Final Rule,” Noreika said. “Unfortunately, since the CFPB published the rule in the Federal Register prior to providing its data for our analysis and we have requested additional data in order to conduct a thorough review, the OCC cannot complete our thorough review in the limited time before a petition must be filed with the Financial Stability Oversight Council (FSOC), pursuant to Section 1023 of the Dodd-Frank Act.”
Noreika said he will not petition the FSOC to stay the effective date of the rule due to the fact that Congress is considering overturning the final rule using the Congressional Review Act.
“I hope Congress will act on this opportunity to preserve effective alternatives for consumers to resolve their disputes without lengthy and costly litigation and to reduce the “piling on” of legal and regulatory burden that I discussed in my testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, on June 22, 2017,” Noreika said.
To see the Final Rule, click here.