smart spending

Dodd-Frank: financial regulation in neutral

Mandatory arbitration reform
Mandatory arbitration reform

If you've ever been diligent enough to actually read the fine print that comes with many financial products, you've probably noticed something called a mandatory arbitration clause.

Such clauses say that by signing a contract required to buy a financial product or service, you're giving up the right to take your disputes with that financial institution to the U.S. court system. Instead, you'll go before an arbiter from a private arbitration firm hired by the institution in question.

While Dodd-Frank already bans mandatory arbitration clauses from mortgages, it also gives the CFPB the power to conduct a study into whether such mandatory arbitration harms consumers, says Benton.

"Depending on the results of the study, the bureau can either prohibit the use of mandatory clauses or put limitations on their use." Benton says.

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