Why Members of Congress File Joint Statement of Disapproval Over Consumer Protection Measure

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Why Members of Congress File Joint Statement of Disapproval Over Consumer Protection Measure

Why Members of Congress File Joint Statement of Disapproval Over Consumer Protection MeasureMandatory arbitration has been slowly taking the place of class action lawsuits, at the behest of major corporations and financial institutions. This makes sense: arbitration allows companies to address each individual complaint filed as a stand-alone incident, whereas in a class-action lawsuit, even consumers who cannot afford individual representation can seek recompense. Fewer consumers able to make complaints means less money paid out as settlements, which can add up to major savings for big companies.

The Consumer Financial Protection Bureau has been investigating this trend for five years, and as a result of their research, has proposed a change to the mandatory arbitration clauses in most banking, finance, cell phone provider, online shopping and media sites, insurance policies, and even nursing home agreements to work cooperatively with others who may have the same issue with the same provider to seek justice. For those businesses that maintain arbitration clauses, the new rule would require the companies to take on the costs of the arbitrations, and likewise in class-action cases to take on the legal costs there as well. However, on the national stage, politicians do not see the rule as useful or effective and recently released a statement of disapproval.

Disputes over research validity and benefit for consumers

The resolution produced by the U.S. Senate Committee on Banking, Housing and Urban Affairs has a very different take on the issue of mandatory arbitration. The claim is that the research conducted by the Consumer Financial Protection Bureau had serious flaws and biases. The committee’s own research suggests that arbitration leads to better outcomes for consumers with higher value awards, quicker results, and lower risks.  Congress does have the ability to overturn the rule through the use the Congressional Review Act, which allows agency rules to be overturned within 60 days, via a simple majority vote.

The Consumer Financial Protection Bureau is not an outside entity to the Washington political process; it is a government agency created in the wake of the 2008 financial crisis to better inform and protect consumers from predatory, unfair, or manipulative financial practices by drafting rules, overseeing companies, and ensuring the observation of current laws and regulations. Recent publications have included guidance for repayment of student loans, ongoing financial education, and retirement fund management assistance.

Facing mandatory arbitration alone can be overwhelming. Knowing the ins and outs of the process and having a team of experts to call on with any questions can make the process much more practicable. The Frankowski Firm’s FINRA lawyers have spent years understanding financial arbitration and using that knowledge to help investors. If you or someone or you know is facing FINRA arbitration, please contact The Frankowski Firm at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

 

 

By |September 1st, 2017|FINRA|

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