SIFMA on the Servicemembers Civil Relief Act
- Kevin Carroll
On March 17, 2015, the New York Times reported on a bill last year, in the prior Congress, that would have amended the Servicemembers Civil Relief Act (SCRA) to allow servicemembers to avoid the enforceability of arbitration clauses. The Times article cites SIFMA as opposed to the bill on the basis that servicemembers are not being harmed by arbitration clauses.
Here’s the rest of the story: The SCRA is generally limited to contracts for rent, installment contracts, mortgages, liens, assignments, leases, and the like. The bill, however, as originally drafted, could be read to ban arbitration clauses in any and all contracts entered into by a servicemember, and not just those enumerated in the SCRA. While we do not believe that was the intent, our concern was that it painted arbitration clauses with too broad a brush.
SIFMA represents the interests of financial services firms and their financial advisers who help clients meet their savings, retirement and other financial goals. Arbitration of broker-dealer disputes has long been used as an alternative to the courts because it is fair, and because it is a faster and less expensive means of resolving disputes. The securities arbitration system has worked well for decades because it is subject to public oversight, regulatory oversight by multiple independent regulators, and rules of procedure that are designed to benefit investors – including servicemembers.
SIFMA does not speak for all business interests whose contracts are covered by the SCRA, nor do we vouch for all arbitration systems, some of which could well benefit from reform or enhancements to better protect consumers, including servicemembers.
We can only speak for our own arbitration system – the securities arbitration system – which we are proud to stand behind and hold up as a benchmark for fairness and protection for investors. For more information, visit the SIFMA Pre-Dispute Arbitration Resource Center.
Kevin Carroll
Managing Director and Associate General Counsel
SIFMA