A new proposal from the U.S. financial watchdog for consumers has been applauded for its ability to help prevent big banks from evading liability for wrongdoing.

The Consumer Financial Protection Bureau’s proposal, unveiled Thursday, curtails mandatory arbitration clauses in financial products like credit cards, bank accounts, and student loans, thereby affording consumers the power to join together in class action lawsuits to sue a financial company.

As watchdog organization Public Citizen previously explained, “Forced arbitration requires consumers to settle disputes before secretive, private tribunals instead of courts.” Yet this “grossly unfair” practice is ubiquitous, the group found, adding Thursday that it’s “an abusive practice in which corporations bury ‘rip-off clauses’ in the fine print of take-it-or-leave-it contracts to block consumers from challenging predatory practices such as hidden fees, fraud and other illegal behavior.”

A statement from the CFPB notes that with such arbitration clauses, “no matter how many consumers are injured by the same conduct, consumers must proceed to resolve their claims individually against the company.”  As a New York Times investigation put it last year, “Some state judges have called the class-action bans a ‘get out of jail free’ card, because it is nearly impossible for one individual to take on a corporation with vast resources.”

“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” said CFPB Director Richard Cordray in a media statement. “Many 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.”

Cordray added in his remarks at a hearing, “Companies would not be able to evade responsibility by blocking groups of consumers from the legal system and reaping the favorable consequences. Everyone benefits from a marketplace where companies are held accountable for treating their customers fairly and in accordance with the law.”

“In effect,” the Times reports Thursday, “the move by the Consumer Financial Protection Bureau — the biggest that the agency has made since its inception in 2010 — will unravel a set of audacious legal maneuvers by corporate America that has prevented customers from using the court system to challenge potentially deceitful banking practices.

Calling such practices “egregious wrongs,” Robert Weissman, president of Public Citizen, said that “the proposed rule will end the worst elements of forced arbitration by restoring consumers’ right to once again band together over shared wrongs.”