HNW investors who want to be able to gang up against their banks in class action lawsuits in the US will not be able to do so if the contracts by which they hold accounts contain 'forced arbitration' clauses. This is because the Senate has voted down a rule issued by the the Consumer Finance Protection Bureau that was ready to go into force next year.

Many - or perhaps most - people in the US sign a contract in which they promise not to join a class action lawsuit when they open a US current (or 'checking') account. This protected Wells Fargo from the wrath of its investors at the height of its 'fake account' scandal because they had all signed forced arbitration clauses in which they promised to settle any disputes singly in arbitration tribunals rather than together or singly in court. Clauses requiring arbitration to settle disputes are also inserted routinely in contracts for credit cards and other financial products.

Wells Fargo had been operating 3½ million fraudulent accounts (set up by its employees at a time when it was encouraging them to sell many products to retail customers) and charging more than 800,000 customers for car loan insurance that they no longer needed. Regulators fined it US$185 million, which in turn led to hearings in Congress, a brisk turnover in board members, 'claw-back' of pay for executives and a thoroughgoing overhaul of its retail operations. The Supreme Court ruled in 2011 that these arbitration clauses were legal, and indeed that any business could include an arbitration clause in its service contract - something the CFPB wanted to remedy for financial institutions.

The same issue surfaced in the aftermath of the Equifax cyber-attack, which has seen it denying its executives their bonuses and struggling to keep its clients from taking their business elsewhere. Equifax originally included an arbitration clause in its offer of free credit monitoring. After an uproar, it said that its arbitration clause was not going to apply to that particular episode. It is now facing a staggering 23 class-action lawsuits on the matter.

A CFPB survey in 2015 found that 93% of credit-card consumers did not know that arbitration clauses in their agreements barred them from taking court action.

President Trump has now signed the law to overturn the CFPB's rule against arbitration agreements. The Office of the Comptroller of the Currency has commented: "President Trump protected consumers and small and midsize banks by repealing a rule that would have cost millions, paved a path to expensive frivolous lawsuits, and lined the pockets of trial lawyers.

"The action...stops a rule that likely would have significantly increased the cost of credit for hardworking Americans and taken away a valuable tool for resolving differences among banks and their customers. The action today preserves a choice for consumers who can choose among financial providers that offer services with arbitration clauses and those that do not.

"The rule would have harmed consumers even as it provided no benefit in deterring bank misbehaviour or preventing customer abuse. It is a new day in Washington..."