ARLINGTON, Va.–NAFCU is expressing concerns to the CFPB over its proposal related to arbitration clauses in financial products and services.
NAFCU Regulatory Affairs Counsel Ann Kossachev told CFPB that while NAFCU supports consumer rights, credit unions should be exempt from any arbitration rulemaking.
“Credit unions are not the bad actors trying to ‘cheat’ consumers that the CFPB’s proposed rule is meant to target,” Kossachev wrote.
She noted NAFCU’s top concerns with the proposal include the ultimate conclusions derived from the CFPB’s final arbitration study used in the proposal, the unintended consequences this proposal may have on credit unions and their members, and the costs to providers and consumers.
Kossachev told the Bureau that its arbitration study is “flawed” and presents a “skewed picture of class action lawsuits compared to arbitration.” She added that the small number of credit unions studied and the lack of additional studies on the effects this rule may have on small entities, including credit unions, are also troubling.
Regarding the proposal’s potential effects on credit unions, Kossachev said NAFCU’s members’ concerns are that if this rule is finalized as is, it will only increase the “incidence of frivolous class action lawsuits they already face.”
CUNA has also raised similar concerns, as CUToday.info reported here.
In addition, as far as increased costs as a result of the proposal, Kossachev in the letter pointed out that the CFPB cannot even accurately estimate the expected cost on small providers and “that some will face considerably higher expenses per year because of the additional federal class settlements.”
Kossachev also explained that NAFCU members are concerned about the Bureau’s proposed plans to create an online database available to the public as they could be exposed to severe reputational risks. “Public access to potentially sensitive information about a credit union and its operations has the potential to harm credit unions, their members, and the financial services industry at large,” she wrote.
Kossachev also outlined the proposed rule’s likely effect on consumers, and wrote that the CFPB should enhance access to legal remedies if it wants to address the issue underlying dispute resolution.