It's hard to believe that the U.S. Supreme Court imagined the case of Willie Cabbil when it ruled in 1987 that investors could be compelled to resolve their disputes with brokers and brokerage firms through mandatory arbitration.

Now in his sixties, Cabbil is a former GM auto worker and pastor who lives in Alabaster, Ala. He entrusted his life savings to a brokerage firm that burned through it in near record time. As virtually all investors are forced to do, Cabbil turned to Finra arbitration, the dispute resolution process run by the very industry that had taken his life savings. Finally, after 18 months and a week-long arbitration proceeding, the arbitrators found his former brokerage firm acted wrongfully and he was awarded $300,000.

At first, Cabbil believed that he would be able to piece back together his shattered dreams of retirement. Here is how he describes what actually happened: "The firm, Resource Horizons, stiffed me and other investors who had secured an award against them. I felt victimized all over again. I assumed the firm either would be able to pay me out of its own pocket or had insurance to pay the award. Never in a million years did I think I would go through this process and then be taken advantage of all over again. We spent over a year trying to secure the money they owed but no luck. I never got paid a dime. The impact of not recovering the money that was stolen from me has been devastating."

Unfortunately, there are too many new Willie Cabbils every year in America.

A February report from the Public Investors Arbitration Bar Association (PIABA, where I am currently serving as president) found that "one out of three cases investors take through to an arbitration hearing and win an award assessing liability and damages goes unpaid ... (and) nearly $1 of every $4 awarded to investors in arbitration hearings goes unpaid." That enormous non-payment problem totaled $62.1 million awarded to people in 225 arbitrations in 2013 alone. PIABA's research echoed earlier unpaid arbitration award findings in a 2000 Government Accounting Office (GAO) report and a 2013 analysis by the Wall Street Journal.

Now that it runs the only game in town for aggrieved investors, Finra cannot afford to have that process fail to work as often as it does. (It should be noted here that some investment firms are trying to free themselves of even this fairly permissive system; Finra is fighting back.) This serious problem requires immediate attention because it goes right to the question of whether the financial markets are giving individual investors a fair shake.

Until then, investors will continue to face the problem of underfunded, if not outright insolvent, brokerage firms and individual brokers on an all-too-frequent basis. Investors are invariably stunned to learn that their trusted financial advisors are not required to maintain insurance, that their firms are thinly capitalized at best, and that the likelihood of collecting a significant award is therefore severely or entirely compromised. To be perfectly clear: the problem would be no different were investors able to prosecute their claims in court. The unpaid award problem is a problem throughout the entire brokerage industry.

What could Finra do to keep its arbitration process and its members from failing hundreds of investor every year?

The PIABA report analyzed several possible remedies and concluded that an industry-financed "National Investor Recovery Pool" is the best fix. A pool presents is the wisest option because it can be created within the existing regulatory structure and will result in both the lowest financial impact to the brokerage industry and the best financial outcome for aggrieved investors.

A substantial portion of the pool could be funded by Finra's annual net income (profit). It should be noted that Finra's coffers are overflowing. Finra's 2014 Annual Financial Report revealed that it maintains a net worth of $1.474 billion. As a non-profit regulator with nearly $1.5 billion in the bank, Finra currently dedicates none of that principal or interest to ensuring that aggrieved investors collect the awards due to them as a result of the wrongful conduct of its members.

In fact, this regulator tasked with promoting investor protection refunded to its members $20 million in 2013 -- an amount equal to nearly a third of the unpaid arbitration awards that year. Finra easily could have used those funds to put a substantial dent in the amount due on outstanding unpaid awards. Given the scale of 2013 unpaid awards, the proposed National Investor Recovery Pool would cost less than $100 per registered representative in the U.S. or a bit under fifty cents per investor, according to PIABA's estimates.

Finra's defense of the status quo is twofold: First, it claims to get rid of brokers who fail to pay arbitration awards; and second, it points out that investors can go to court if their broker is already defunct, or to enforce their arbitration award. But even if Finra does eject unpaying firms and brokers, the damage is already done and the banishment is no consolation to ripped-off investors. And it is the height of irony to suggest that investors who have been denied their day in court may only use such a venue after their trusted broker has been kicked out of the industry, or the mandatory arbitration has utterly failed to help them. It is hard to imagine a "defense" that concedes more concerning the flaws of the status quo than that one does.

An industry that runs its own customer dispute resolution process risks shattering the confidence of those customers in the fairness of its marketplace when that process utterly fails to work one out of every three times. Investors in arbitration face odds twice as bad as they would if they were playing Russian roulette. Willie Cabbil and all other American investors deserve a much fairer shake than that.

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.