NAIC Draws Line In CFPB Sandbox

The National Association of Insurance Commissioners has taken a firm stance on the Consumer Financial Protection Bureau's proposed ban on "mandatory arbitration" clauses that make financial product consumers waive their right to join class actions.

Because consumer loans are generally financial products within the CFPB's purview, the CFPB stated that the proposed ban would extend to any such arbitration clauses used for whole life insurance policy loans if: (a) the insurance company is a "creditor" under the Equal Credit Opportunity Act (ECOA) and (b) the activity is not the "business of insurance" under the Dodd-Frank Act. In a comment letter, however, the NAIC urged the agency to remove altogether such policy loan features from the scope of the rule.