The CFPB announced today that it will be holding a field hearing on arbitration
on December 12, 2013 at 11 a.m. CST in Dallas, Texas. The hearing will feature remarks from Director Cordray and testimony from consumer groups, industry representatives, and members of the public.
Consistent with its typical practice, the CFPB may use the hearing as the backdrop for announcing an arbitration-related development. That development could be the CFPB’s partial release of results from the arbitration study that the Bureau launched in April 2012. (The CFPB broke from its typical practice when it did not announce any new initiatives at its auto finance forum last month.)
The study is mandated by Section 1028 of the Dodd-Frank Act which requires the CFPB to “conduct a study of, and to provide a report to Congress concerning, the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.”
Section 1028 further provides that the CFPB “by regulation, may prohibit or impose conditions or limitations on the use of [such] an agreement” if the CFPB “finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers.” When Director Cordray appeared before the Senate Banking Committee in
April 2013, he stated that he was “quite sure” that at least “some” of the results of the CFPB’s study of consumer arbitration would be publicly released this year.
In September 2013, pursuant to Section 1022(c)(4) of Dodd-Frank, the CFPB issued a series of orders to various financial institutions seeking their standard forms of checking account agreement to review in connection with the arbitration study. Section 1022(c)(4) allows the CFPB “to gather information from time to time regarding the organization, business conduct, markets, and activities of covered persons and service providers” by using various methods, including requiring banks and other “covered persons and service providers participating in consumer financial services markets to file with the Bureau, under oath or otherwise, in such form and within such reasonable period of time as the Bureau may prescribe by rule or order, annual or special reports, or answers in writing to specific questions.” If the CFPB does release the partial results of its study, it is likely to focus on the prevalence and terms of arbitration provisions in consumer financial services contracts.