To Decline or to Accept? – Scrutinizing CFPB’s New Arbitration Rule Proposal
The Consumer Financial Protection Bureau’s (CFPB’s) Notice of Proposed Rulemaking on Arbitration Agreements is facing a strong opposition as various organizations from the financial industry flood the agency with comments rebutting the proposed rule. The contentious regulation would prohibit mandatory arbitration clauses in consumer financial contracts and would require companies to disclose information regarding the arbitrations conducted under agreements.
In their 42-page rebuttal, the American Bankers Association, the Consumer Bankers Association and the Financial Services Roundtable, have unanimously expressed their dissatisfaction on CFPB’s perceived failure to consider alternatives. They presented arguments on the efficiency of arbitration for both consumers and financial services companies.
The sturdy disapproval from the industry indicates a rocky road for CFPB’s completion of the regulation. If finalized, the regulation is expected to cause sweeping implications to companies’ consumer financial product and services offering. It would also impact the resolution of consumer disputes and the mitigation of potential liability. Firms should start mulling over numerous considerations at play.
In this two-hour LIVE Webcast, a panel of distinguished professionals and thought leaders assembled by The Knowledge Group will help consumer financial services companies understand the important aspects of this significant topic. They will provide an in-depth discussion of the Proposed Rule and will also offer best practices in responding to the new regulatory landscape.
Key topics include:
- The New Arbitration Rule – Overview
- Implications to the Financial Services Industry
- Risk Management
- Best Practices in Responding to the Rule
Jennifer D. Newton, Attorney
Shutts & Bowen LLP
- Overview and statutory background of the CFPB’s Proposed Rule
- Scope of the Proposed Rule
- Forecast: Potential Legal and Political Challenges to the Final Rule
Mark T. Dabertin, Special Counsel
Pepper Hamilton LLP
- Does the threat of class action lawsuits actually offer a more effective means for driving industry-wide compliance than the informal resolution of consumer complaints?
- Is adoption of the proposed rule actually likely to trigger additional investments in compliance management that would “eliminate completely” the risk of a significant increase in the volume of class action lawsuits?
- Are the existing economic incentives for complying with consumer protection laws truly weaker than those for failing to comply?
- The proposed rule seeks to provide redress for “legal harms [that] are often difficult to for consumers to detect without the assistance of an attorney.” Are such ‘undetectable’ consumer harms still actionable in the aftermath of the U.S. Supreme Court’s recent decision in Spokeo v. Robins or has the legal landscape shifted since the proposed rule was published?
- Is there anything inherently wrong with considering the profitability of a customer relationship in deciding how to address an informal dispute?
- Would the proposed ongoing reporting on the results of arbitral proceedings actually help bring greater transparency to the arbitration process or instead deter providers of financial products and services from offering arbitration altogether?
- The CFPB asserts that the potential benefits of allowing class action lawsuits represent the “price worth paying” for the possibility of dampening new product innovation? How does one place a reliable price tag on lost innovation?
- The CFPB articulates a two-pronged approach to proposed rulemakings generally that goes beyond arbitration agreements. What are the ramifications of the CFPB’s separate consideration of a “public interest” prong and a “consumer protection” prong in evaluating the probable effects of a proposed rule?
John C. Dineen, Partner
Sheppard, Mullin, Richter & Hampton LLP
Mark G. Rackers, Attorney
Sheppard, Mullin, Richter & Hampton LLP
- Walk through challenges of class action arbitrations
- Procedures: Class certification, class wide discovery, timing inside arbitration
- Challenges for party that has more data, and documents
- Lack of appellate review
- End of arbitration clauses for many financial institutions
- Many / most companies will conclude that the worst possible outcome is class wide arbitration and therefore will remove such clauses from contracts and/or not enforce them
- Increased costs / burdens for companies
- Litigation budget increases
- Expansion of in-house legal teams to manage outside litigation
- Increase of class actions by the hundreds for companies to defend.
Who Should Attend:
- Consumer Finance Attorneys
- Consumer Financial Services Companies
- Chief Financial Officers
- Financial Reporting Managers
- Finance Executives
- Compliance Officers
- Other Related/Interested Professionals
Mark T. Dabertin is special counsel in the Financial Services Practice Group of Pepper Hamilton LLP, resident in the Berwyn office. Mr. Dabertin has over 25 years of broad-based experience in financial services law and consumer and regulatory compliance.
Mr. Dabertin’s career includes extensive experience in consumer lending, safety and soundness, and anti-money laundering. His work in consumer and regulatory compliance at large financial institutions has been marked by innovations that resulted in fundamental structural changes to existing firm-wide compliance activities, including with respect to regulatory change management, risk assessments, and vendor management.
Mark T. Dabertin is special counsel in the Financial Services Practice Group of Pepper Hamilton LLP, resident in the Berwyn …
John Dineen is a partner in the Business Trial Practice Group in the firm's San Diego office.
Mr. Dineen practices general business and commercial litigation. He has a wide array of experience in complex civil litigation. He has successfully represented clients in claims involving breach of contract, unfair business practices, fraud, negligence, Truth-In-Lending and Real Estate Settlement Procedures Acts and other causes of action. Mr. Dineen has successfully represented clients in numerous real property disputes, including quiet title actions, easement disputes, and lease and ownership disputes. Mr. Dineen is a Co-Team Leader of the Firm’s Mortgage Industry Team.
Mr. Dineen also has significant experience in defending consumer class action claims, including claims brought under the Song-Beverly Credit Card Act, the Telephone Consumer Protection Act, the Consumer Legal Remedies Act, California's Rosenthal Act and other statutory claims. He has extensive experience in all aspects of class action litigation, including coordination proceedings in California courts.
John Dineen is a partner in the Business Trial Practice Group in the firm's San Diego office. Mr. Dineen practices …
Mark Rackers is an Attorney in the Business Trial practice group in the firm's San Diego office and a member of the firm's Mortgage Banking and Food and Beverage Teams. He is an experienced trial attorney who represents clients in a variety of business disputes, with a special emphasis on lender liability, real estate, consumer class action defense, privacy and unfair competition.
Mr. Rackers’ practice focuses on complex business litigation with an emphasis on the financial services industry. He spent two years in Wells Fargo Bank's legal department, where he managed a portfolio of mortgage, student loan, bankruptcy, credit card, and auto finance matters in all areas of litigation, including trial. He also counseled the Bank on risk management and compliance with state and federal consumer protection regulations, including regulations relating to TILA, RESPA, TCPA, FDCPA and FCRA.
At Sheppard Mullin, Mr. Rackers continues to counsel financial institutions on compliance matters and has successfully represented clients in both state and federal court against claims of fraud, breach of contract, unfair business practices and negligence. His experience includes all aspects of pre-trial practices, dispositive motions, and briefing before the California Courts of Appeal and the Ninth Circuit Court of Appeals. Mr. Rackers also has experience as lead trial counsel, obtaining complete victories in bench and jury trials, and has successfully argued before the California Court of Appeal.
Mr. Rackers serves on the firm’s Pro Bono Committee and heads pro bono efforts for the San Diego office.
Mark Rackers is an Attorney in the Business Trial practice group in the firm's San Diego office and a member …
Jennifer D. Newton is an attorney in the Miami office of Shutts & Bowen LLP, where she is a member of the Financial Services Practice Group. The Shutts & Bowen Financial Services Practice Group has been recognized by Chambers USA as a first tier banking and finance practice area since its first publication.
Jennifer has nearly a decade of experience in consumer financial matters both in private practice and with the federal government. Jennifer regularly advises a wide-range of clients on consumer finance and banking regulatory, litigation, transactional and compliance matters, including matters related to the Real Estate Settlement Procedures Act (RESPA), the Equal Credit Opportunity Act (ECOA), the Truth in Lending Act (TILA), the Home Mortgage Disclosure Act (HMDA), the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), consumer lending issues under the CARD Act, and data breach and emerging payment issues involving the Gramm-Leach-Bliley Act (GLBA), the Banking and Secrecy Act (BSA/AML), the Telephone Consumer Protection Act, and the Electronic Fund Transfer Act (EFTA).
Jennifer D. Newton is an attorney in the Miami office of Shutts & Bowen LLP, where she is a member …
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About Pepper Hamilton LLP
Formed in 1890, Pepper Hamilton LLP is a multi-practice law firm with more than 500 lawyers nationally. The firm provides corporate, litigation and regulatory legal services to leading businesses, governmental entities, nonprofit organizations and individuals throughout the nation and the world.
The financial services industry is changing rapidly. The expansion of financial institutions into new areas – securities, mutual funds, hedge funds and insurance – requires a group that has the breadth and depth to handle all these needs, needs met by the lawyers in Pepper’s Financial Services group.
Representing lenders in transactions is a significant part of our work. We also represent corporate clients in their borrowings; represent clients in asset sales and securitization transactions, representing issuers of public and private debt securities, beneficial holders of such securities and trustees; counsel our bank clients in hostile takeover attempts, auction processes for possible sales, and other corporate governance matters.
The list of federal agencies, laws and regulations that govern banks and other financial institutions seems endless and ever-growing. Add the overlay of state regulation on many institutions, and the picture gets even more complex. We also help commercial banks, bank holding companies, foreign banks, mortgage finance companies, and savings and loans to comply with all regulatory requirements.
About Sheppard, Mullin, Richter & Hampton LLP
Sheppard Mullin is a full service Global 100 firm with 780 attorneys in 15 offices located in Beijing, Brussels, Century City, Chicago, Del Mar, London, Los Angeles, New York, Orange County, Palo Alto, San Diego, San Francisco, Seoul, Shanghai and Washington, D.C. Litigation has been at the core of the firm's practice since 1927. Sheppard Mullin’s litigation practice consists more than 200 attorneys with significant trial expertise located throughout the firm who focus their full attention on representing institutional clients in state and federal trial and appellate courts, as well as in arbitration, mediation and other alternative dispute resolution proceedings. The firm provides solutions to clients at every stage of dispute resolution, from demand letters on overdue obligations to pre‑litigation negotiations and settlement through provisional remedies and litigation and appellate matters. The firm’s litigators possess exceptional trial and appellate skills, in-depth knowledge of state and federal courts at all levels and practical business judgment, all of which contribute to the consistent delivery of solid, cost efficient results.
About Shutts & Bowen LLP
Shutts & Bowen LLP is a full-service law firm with a deep connection to Florida’s history and a commitment to excellent service for our clients and community. Founded in 1910, Shutts has been opening doors to our business clients across the state for over a century.
Our firm employs approximately 270 attorneys across more than 30 practice areas and 7 offices and provides our business and individual clients high-quality and responsive legal services. We value the relationships we have established over the years with startups and mid-market businesses, Fortune 100 companies and international corporations, banking and investment firms, governmental agencies and municipalities as well as prominent individuals and families seeking to preserve their assets.
Our founders are directly linked to the creation of the Flagler railroad and Florida’s largest newspaper dating back more than 100 years. We honor these relationships by dedicating our time and expertise to issues that are important to our clients and communities. We propose new legislation, contribute thought leadership in industry publications and conferences, and support business and charitable organizations alongside our clients. We believe this dedication helps us build important connections that enhance our service to clients.
Because of our stake in the past, we are poised to become the law firm of the future.