ME Bank has been named and shamed by an industry body over last year’s bungled changes to redraw accounts, which amounted to serious breaches of the banking code of practice.
The Banking Code Compliance Committee (BCCC) which oversees the code, on Tuesday issued findings from its inquiry into ME Bank’s controversial changes to redraw facilities. These are products that let customers withdraw money they have put into their home loan above the minimum repayments.
The policy change in April last year meant some customers’ limits were abruptly cut at a time of heightened economic uncertainty due to the pandemic. Crucially, the bank failed to notify clients before making the changes.
ME Bank, which is being bought by Bank of Queensland, last year reversed the changes and apologised for the conduct.
The BCCC on Tuesday said ME Bank had made “serious and systemic” breaches of the code, with chairperson Ian Govey highlighting the potential impact of the changes on customers’ wellbeing, at a time of great economic uncertainty.
“It was imperative that ME Bank notified customers prior to making any adjustments to their redraw facilities, especially given the changes took place when the COVID-19 pandemic was significantly affecting customers’ livelihoods,” Mr Govey said.
“ME Bank should have given special consideration to the potential health impacts its communications, or lack thereof, would have had on customers at that time,” Mr Govey said.
The BCCC found ME Bank breached clauses of the code requiring “timely, clear and useful communication” and “fair and reasonable conduct.”
However, ME did not breach parts of the code dealing with changes to terms and conditions, or staff training. It applied a sanction by naming ME Bank on its website and in its annual report.
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