March 04, 2016

Hunt tells CFPB of CUs' responsible overdraft services

Strongly urging CFPB to avoid any rulemaking that would restrict overdraft programs at credit unions, NAFCU's Carrie Hunt on Friday provided the bureau with additional data on credit unions' responsible overdraft services.

"As member-owned not-for-profit cooperatives, credit unions consistently strive to provide their members with financial products and services designed to help each member achieve their individual financial needs and goals," Hunt, NAFCU's executive vice president of government affairs and general counsel, wrote in a letter Friday to CFPB Director Richard Cordray. "To that end, credit unions have a vested interest in educating their member-owners on overdraft terms and conditions in addition to working closely with those members to resolve any disputes or concerns."

Hunt noted NAFCU's November/December Economic & CU Monitor survey results that indicate credit unions act in good faith when administering their overdraft programs and that their members value the service. She wrote that of those credit unions with an overdraft or courtesy pay program, 93.5 percent of them offer an alternative product, such as an overdraft line of credit (83.9 percent), a linked savings or money market accounts (61.3 percent) and short-term, small amount loans (22.6 percent).

When NAFCU asked its member credit unions how further regulation on their overdraft or courtesy pay programs might affect them and their members, Hunt wrote, survey respondents said additional regulation would likely have a negative impact. "The loss of a service that they have come to rely on would result in widespread dissatisfaction among members with the credit union, and the members themselves could suffer embarrassment and a decline in their credit rating when transactions are declined," Hunt stated.

Hunt reiterated credit unions positive track record within the financial services industry and urged CFPB to avoid grouping credit unions with the entities the bureau is aiming to restrict.