WASHINGTON – As the CFPB contemplates how to encourage financial institutions to stop offering overdraft accounts, the agency must carefully avoid unintended consequences that would result in fewer choices for consumers, panelists at CUNA's Governmental Affairs Conference warned Tuesday.

For instance, burdensome regulations could force credit unions to eliminate certain services and drive customers to payday lenders, Gigi Hyland, executive director of the National Credit Union Foundation, said. She added that if a credit union decides to offer no overdraft accounts, it must be as automated as possible to lower credit union costs.

In addition, she said, credit unions should attempt to determine why particular members are overdrafting their accounts. But such work can be costly because it requires employees to build a trusting one-on-one relationship with members.