FIA responded to a proposed rule from the Consumer Financial Protection Bureau (CFPB) on pre-dispute arbitration agreements, raising significant concerns with the rule's scope. The proposed rule, which would prohibit class-action waivers in consumer contracts, exceeds the authority of the CFPB by seeking to regulate firms that are already subject to exclusive CFTC oversight.
FIA's response explains that the CFTC has plenary authority over U.S. futures and swaps markets and market participants. The Dodd-Frank Act expressly acknowledges that authority and prohibits the CFPB from enforcing its powers under the Dodd-Frank Act against CFTC-regulated entities. Moreover, the CFTC enforces rules governing pre-dispute arbitration agreements, which make the CFPB's attempt to regulate these firms unnecessary and duplicative. "The CFPB should not graft additional rules for FCMs on top of the CFTC’s regulation," the letter states, noting that this is precisely the type of regulatory overlap that Congress sought to avoid in the Dodd-Frank Act.
"As the exclusive regulator of futures and swaps markets, the CFTC is uniquely qualified and best positioned to determine the rules necessary and appropriate to protect FCM customers, including with respect to pre-dispute arbitration agreements in FCM customer agreements," FIA stated. "Requiring FCMs that are already subject to the CFTC’s plenary jurisdiction to comply with additional CFPB rules on a service-by-service basis is at best cumbersome and very likely unnecessary."
FIA's comments were confined to the scope of the rule as it relates to CFTC-regulated entities. "To be clear, we do not oppose the CFPB’s exercise of its authority under the Dodd-Frank Act to regulate wide aspects of consumer contracts, including the pre-dispute arbitration agreements contained therein, that Congress meant for it to regulate in the wake of the 2008 financial crisis. We merely request that the CFPB respect the carefully prescribed jurisdictional boundaries of it and the CFTC and avoid imposing overlapping regulations where they are neither required nor appropriate."
The full letter is available in Resources on the right.
Read the CFTC's response here and SIFMA's response on similar jurisdictional issues here.
