On May 5, 2016, the Consumer Financial Services Bureau issued a proposed rule that would ban consumer financial services providers from including arbitration clauses in new contracts that prevent customers from filing or joining class actions. The proposed rule does not prevent companies from requiring consumers to arbitrate individual disputes.

In a statement accompanying the rule release, the CFPB claimed that allowing class actions will stop banks and other consumer finance providers from “sidestepping the legal system.” According to CFPB Director Richard Cordray, “[m]any banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them. Our proposal seeks comment on whether to ban this contract gotcha that effectively denies groups of consumers the right to seek justice and relief for wrongdoing.”

In addition to banning contract terms that prevent customers from filing or joining class actions, companies would have to report arbitration claims and awards to the CFPB, which the agency said it may then publish. The CFPB also announced it would publish specific language that must be used in contracts to allow class actions.

The proposed rule would apply to most consumer financial products and services that the CFPB oversees, including lending money, storing money, and moving or exchanging money. Congress already passed a law prohibiting arbitration agreements in residential mortgage agreements.

The U.S. Chamber Institute for Legal Reform and U.S. Chamber of Commerce Center for Capital Markets Competitiveness issued a joint statement criticizing the rule, stating that the proposed rule presents the “biggest gift to plaintiffs lawyers in a half-century.”

“In the 50 years since the advent of modern-day class action lawsuits, plaintiffs lawyers have made millions of dollars in fees from these suits while consumers often receive little benefit. With this rule, the CFPB doubles down on that trend,” the press release said. “The proposed rule is a wolf in sheep’s clothing. The CFPB’s own study concludes that arbitration empowers consumers to resolve disputes easily and quickly on their own without having to hire a lawyer. Nevertheless, the CFPB’s rule will have the practical effect of eliminating arbitration for most consumers.”

Read more: Wall Street Journal (on-line); LA Times (on-line)