The CFPB has announced that it will hold a field hearing about arbitration in Denver, Colorado on October 7, 2015 and has asked Alan Kaplinsky, Practice Leader of Ballard Spahr’s Consumer Financial Services Group, to represent industry at the hearing.
As the CFPB typically uses field hearings as the venue for announcing new developments, we expect the CFPB has scheduled this hearing in anticipation of taking the next step towards issuing a proposed arbitration rule. That step would be the convening of a small business review panel required by the Small Business Regulatory Enforcement Fairness Act (SBREFA) and the Dodd-Frank Act to provide input on the proposal the CFPB is contemplating. We expect the hearing to coincide with the CFPB’s release of materials it will distribute to the SBREFA panel, which are likely to include an outline of its proposal and related information. We understand that the CFPB has already begun extending invitations to prospective SBREFA panelists. (In March 2015, in conjunction with holding a field hearing on payday lending, the CFPB released a factsheet and outline of its contemplated proposals for regulating payday and other small-dollar, high-rate loans in preparation for convening a SBREFA panel.)
On March 10, 2015, the CFPB held a field hearing on arbitration in Newark, New Jersey that coincided with the release of the final results of the CFPB’s consumer arbitration study as mandated by Section 1028 of Dodd-Frank. Section 1028 of Dodd-Frank requires the CFPB to conduct the study and allows it to regulate, limit, or even prohibit the use of arbitration in the offering of consumer financial products or services if doing so is found to be “in the public interest and for the protection of consumers.” At the March hearing, Alan presented the industry’s perspective on arbitration agreements. (The CFPB has released a video of the field hearing on which Alan’s remarks can be found.)