The Consumer Financial Protection Bureau (CFPB) recently announced a new rule that restricts the use of arbitration agreements in contracts for financial products and services. The rule, which is set to take effect in September 2017, has been met with both praise and criticism.

Arbitration agreements are often included in contracts for financial products and services, such as credit cards and bank accounts. These agreements require consumers to settle disputes with the company through arbitration instead of going to court. The CFPB`s new rule will prohibit companies from using arbitration agreements to block consumers from joining together to sue them.

The CFPB`s Director, Richard Cordray, argues that the new rule will allow consumers to hold companies accountable for wrongdoing. “Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” Cordray said in a statement. “These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up.”

However, some groups have criticized the new rule, claiming that it will lead to an increase in frivolous lawsuits. The U.S. Chamber of Commerce has called the rule “a gift to trial attorneys” and has vowed to fight it in court.

In addition to restricting the use of arbitration agreements, the new rule requires companies to submit records of individual arbitration cases to the CFPB. The CFPB will use this information to monitor arbitration proceedings and potentially take action against companies that engage in abusive or unfair practices.

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