Arbitration provides a fair, easy-to-use and efficient means for resolving disputes. Many financial services companies have established arbitration programs to decide customer disputes.

If the US Consumer Financial Protection Bureau (“CFPB” or “the Bureau”) has its way, that all will change.

The CFPB is about to issue a rule that, if it goes into effect, will effectively eliminate these arbitration programs. As outlined by the Bureau, the proposed rule—which the Bureau says it plans to issue sometime in the next several weeks—will prohibit arbitration clauses unless the clauses also permit consumers to bring class action lawsuits.

That will inevitably result in the elimination of arbitration in the financial services context.

Here’s why.

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