ME Bank hit with criminal charges over interest rate disclosures

ME Bank has been charged over loan interest rate changes.

ME Bank has been charged over loan interest rate changes. Photo: TND

Regulator ASIC has moved against ME Bank leveling criminal charges in the Federal Court over false and misleading statements and breaches of the Credit Act.

The alleged offences are said to have been committed over two years to September 2018 and relate to claims about interest rates.

“The alleged contraventions concern home loan customer communications in the period September 2016 to September 2018, and arise from issues that were addressed in 2019,” ME Bank said.

ME said it had reported the issues to ASIC in October 2018. Affected customers were remediated nine months later for a total of $105,000.

“ME confirms the matters identified in relation to the home loan customer communications have been addressed and are not ongoing,” the bank said in its statement.

The alleged contraventions are of the ASIC Act around making false or misleading representations around interest rates. There are also alleged breaches of the National Credit Code in relation to the obligation of credit providers to give notice to borrowers of rate changes no later than a day after the changes.

The charges also claim that ME breached obligations to provide at least 20 days notice for a change in the frequency or time of payment, or a change in the calculation of minimum repayments of interest payments. No date has been set for a court hearing.

The charges do not relate to ME Bank’s controversial moves to reduce home loan redraw facility limits in 2020, which left some customers unable to access the capital they expected to be able to take out of their mortgage accounts. Because the move happened at the height of the COVID-19 panic many of the customers concerned were highly stressed by it.

The bank apologised and then undid the changes for customers requesting that action. In April, the Banking Code Compliance Committee sanctioned ME Bank, saying the lender’s communications to customers were “poor and ineffective”.

At the time of the alleged breaches the bank was owned by 26 industry superannuation funds. In February, Bank of Queensland bought ME Bank for $1.325 billion in cash, or 1.15 times ME’s net tangible assets. The transaction is due to be finalise by August.

The New Daily is owned by Industry Super Holdings

Topics: ASIC
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