Legislation introduced this week would prohibit registered investment advisors, broker-dealers and securities dealers from using customer contracts that contain forced arbitration agreements or prohibit investors from joining a class action lawsuit.

The Investor Choice Act, which has been introduced by Rep. Bill Foster (D-Ill.) and Sen. Jeff Merkley (D-Ore.), gives investors the freedom to choose between resolving disputes through arbitration or court action.

“Every consumer deserves a fair shot at justice when they've been wronged or taken advantage of by investors," Merkley said in a statement. “But when an investment advisor or broker chooses the judge, pays the judge, and promises future business to the judge, it's clear that the system meant to deliver that justice is rigged. It’s long past time we stand up for consumers.”

The has won the endorsement of the North American Securities Administrators Association (NASAA) and comes at a time when investor and consumer groups are pushing back against the securities industry's use of forced arbitration clauses.

"Individuals shouldn't need to surrender their legal rights because they choose to work with a financial advisor or broker-dealer to plan for their retirement and invest their hard-earned money," Foster said in a statement. "This legislation levels the playing field for consumers and prevents them from being victims of a rigged system that denies them fair legal recourse if they are wronged."

About 61% of RIAs force their clients to go to arbitration to settle disputes, according to the SEC.

The Investor Choice Act is cosponsored by senators Dick Durbin (D-Il.), Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), Catherine Cortez Masto (D-Nev.), and Sheldon Whitehouse (D-R.I.), and representatives Sean Casten (D-Ill.), Jan Schakowsky (D-Ill.), Gregory Meeks (D-N.Y.), Nydia Velázquez (D-N.Y.), and Madeleine Dean (D-Pa.).

With a Republican majority in the House and slim Democrat majority in the Senate, passage of the legislation is a longshot in this Congress, but its introduction underscores a growing movement among lawmakers and investor advocacy groups to ban forced arbitration.

Yesterday, seven prominent investor advocacy groups announced at a press conference that they had formed a coalition to turn up the heat on the SEC and Congress to put an end to the forced arbitration clauses a majority of registered investment advisors require.

The coalition's creation follows a January report from the SEC’s Office of Investor Advocate that found that the mandatory arbitration system is stacked against investors and likely violates advisors’ fiduciary duty.

Coalition members include the Public Investors Advocate Bar Association (PIABA), the American Association for Justice (AAJ), Americans for Financial Reform (AFR), Better Markets, the Consumer Federation of America (CFA), the National Association of Consumer Advocates (NACA) and Public Citizen.