A guide intended to be an easy-to-use summary of the Consumer Financial Protection Bureau’s (CFPB) Arbitration Agreements rule — and to highlight information that may be helpful when implementing the rule — has been published by the bureau.
The 40-page Small entity compliance guide: Arbitration agreements rule 1.0 looks at coverage of the rule, general requirements, prohibitions on relying on pre-dispute arbitration agreements to block class actions and submission of records.
Compliance with the rule, issued this summer, is required for pre-dispute arbitration agreements entered into or after March 19, 2018.
The guide notes the obligations and restrictions on “providers” of persons providing certain consumer financial products and services covered by the rule. “Providers” are defined as a person (or an affiliate of that person, in some cases) who engages in a “covered consumer financial product or service” (as defined in the rule), unless specifically excluded from coverage (such as those already regulated by the Securities and Exchange Commission, or those regulated by a state securities commission).
Generally, the guide notes, the restrictions and obligations on providers are:
- Prohibition from relying on pre-dispute arbitration agreements to block class actions concerning consumer financial products and services covered by the Rule.
- Requirement that providers to include specific language in pre-dispute arbitration agreements they enter into concerning covered consumer financial products and services stating that the agreement may not be used to block class actions.
- Requirement that providers who use pre-dispute arbitration agreements submit to the Bureau certain arbitration-related records (which the CFPB said it will publish these records on its website in redacted form).