Proposed Pay Hike for FINRA Aribtrators

Will parties to FINRA arbitration soon see an upgrade in the quality of arbitrators?  Will increased arbitrator compensation attract more arbitrators?  Will arbitrators already on panel take their roles more seriously or spend more time considering the merits of claims (leading, presumably, to better results)?  Will the parties to arbitration -- including those least able to afford the cost (investors) -- see an increase in arbitration fees? 

These are some of the questions the players in securities arbitration are considering in the wake of FINRA's proposal to increase compensation to arbitrators from $400 to $600 per day -- a 50% pay raise. 

The summary posted to the FINRA website explains:

The Board authorized FINRA to file with the SEC amendments to the Customer and Industry Codes of Arbitration Procedures to increase some arbitration fees for the sole purpose of increasing arbitrator honoraria for the first time since 1999. For example, under this proposal, FINRA would pay arbitrators $600 for each hearing day ($300 per hearing session) instead of the current $400 rate, and the chairperson of the panel would receive an extra $125 per day instead of the current $75 rate. To cover these honoraria increases, FINRA would increase the member firm surcharges and case processing fees for claims larger than $250,000. The proposal would also increase filing fees for investors, associated persons, or firms bringing claims of more than $500,000. The proposal would also raise hearing session fees for claims of more than $500,000; arbitrators may allocate responsibility for the hearing session fees in their award. FINRA believes that the proposed honoraria increases are needed to recruit and retain a roster of high-quality arbitrators.

It seems hard to argue that a fee that has remained static for more than a dozen years ought to keep falling behind inflation.  When FINRA fees are compared to other arbitrator forums (such as AAA or JAMS), the FINRA fees remain very low.  However, compared to state or federal court -- funded by the taxpayers -- FINRA fees are much higher.  No matter the size of a civil claim filed in court, filing, jury trial, and other fees remain the same and those fees are measured in the hundreds of dollars, not the thousands. 

The way I see it the increase in arbitrator fees is over due.  Arbitrators perform important service, should be compensated for that service fairly, and higher fees should attract more arbitrators and quite possibly higher caliber arbitrators -- with the caveat that FINRA should work hard to keep the cost of FINRA arbitration modest since filing fees do deter claimants from filing claims, creating access to justice concerns.  After all, FINRA arbitration remains mandatory for most investors, and arbitration clauses amount to contracts of adhesion for 99% of small investors.