Banning or Restricting Arbitration Under Dodd-Frank

By John Low

Section 1028 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Act") authorizes the Bureau of Consumer Financial Protection ("Bureau") to ban or restrict mandatory arbitration and directs the Bureau to conduct a study and report to Congress. The Act does not fix a time within which the study must be conducted and there is no indication that any study has been commenced.

Until a study can be completed and submitted to Congress, the Bureau does not have the authority to ban or restrict arbitration agreements. At such time as a study has been completed, the Bureau may prohibit or impose conditions on arbitration only if it "finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers." The Bureau's findings must be consistent with its study.

Because of the scope of the Bureau's responsibilities and the absence of a Congressional approved director of the Bureau, it is unlikely that any study will be initiated soon. Once the study has been completed and submitted to Congress, any regulation adopted by the Bureau will not be effective until 180 days after the effective date of the regulation.

In anticipation of arbitration being prohibited, some banks have eliminated arbitration provisions in their consumer documents. If arbitration is desirable, such action is premature. It could be as long as two years before the Bureau regulates arbitration. By then, Congress may have repealed all or part of the Act.

If you have any questions regarding this article or its possible impact on your activities and operations, please contact your Sherman & Howard attorney or any member of the Banking & Finance Practice Group.

Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation and does not create an attorney-client relationship between any reader and the Firm.

	Contact Us Services Attorneys News and Events Publications About the Firm Inclusiveness Careers Blog In the Media Events and Registration Press Releases Speaking Engagements Articles Client Advisories Subscriptions History Offices Pro Bono Interlaw Contact Us Culture Legal Opportunities Support Staff Publications Client Advisories Home > Publications > Client Advisories > View Banning or Restricting Arbitration Under Dodd-Frank By John Low Section 1028 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Act") authorizes the Bureau of Consumer Financial Protection ("Bureau") to ban or restrict mandatory arbitration and directs the Bureau to conduct a study and report to Congress. The Act does not fix a time within which the study must be conducted and there is no indication that any study has been commenced. Until a study can be completed and submitted to Congress, the Bureau does not have the authority to ban or restrict arbitration agreements. At such time as a study has been completed, the Bureau may prohibit or impose conditions on arbitration only if it "finds that such a prohibition or imposition of conditions or limitations is in the public interest and for the protection of consumers." The Bureau's findings must be consistent with its study. Because of the scope of the Bureau's responsibilities and the absence of a Congressional approved director of the Bureau, it is unlikely that any study will be initiated soon. Once the study has been completed and submitted to Congress, any regulation adopted by the Bureau will not be effective until 180 days after the effective date of the regulation. In anticipation of arbitration being prohibited, some banks have eliminated arbitration provisions in their consumer documents. If arbitration is desirable, such action is premature. It could be as long as two years before the Bureau regulates arbitration. By then, Congress may have repealed all or part of the Act. If you have any questions regarding this article or its possible impact on your activities and operations, please contact your Sherman & Howard attorney or any member of the Banking & Finance Practice Group. Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation and does not create an attorney-client relationship between any reader and the Firm. ©2011 Sherman & Howard L.L.C. September 12, 2011 Copyright 2000-2013 Sherman & Howard L.L.C. All rights reserved. Privacy Policy \| Terms of Use