The Australian Securities and Investments Commission (ASIC) said that following an investigation, criminal charges were filed against Members Equity Bank Ltd (ME Bank) in the Federal Court of Australia on 25 May.
According to ASIC, the charges are related to alleged contraventions of sections 12DB(1)(g) and 12GB(1) of the ASIC Act 2001, which regulate false and misleading representations.
The charges are also related to sections 64(1) and 65(1) of the National Credit Code.
Section 64(1) stipulates that the lender must provide at least a day’s notice to home loan customers about any changes to annual interest rates or rates payable under a credit contract, while section 65(1) states that the bank must provide at least 20 days’ notice before changing a customer’s home loan calculation, instalments or minimum repayment amounts.
ASIC has alleged that ME Bank contravened these laws between 2 September 2016 and 3 September 2018.
The court has not yet set a date for the first return of the matter. ASIC added that further details will be released following that hearing.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions following a referral from ASIC.
Remediation to borrowers total $105k: ME Bank
ME Bank acknowledged the filing of the criminal charges in the federal court, telling Mortgage Business that the alleged contraventions concern home loan customer communications in the period between September 2016 and September 2018.
It also said that the issues have arisen from issues that were addressed in 2019, and that the issues were reported by ME Bank to ASIC in October 2018.
Affected customers were remediated by June 2019, with remediation to affected customers totalling around $105,000, ME Bank said.
Commenting on the matter, ME Bank said: “ME confirms the matters identified in relation to the home loan customer communications have been addressed and are not ongoing.”
Last year, the non-major bank reduced the amount borrowers could redraw from specific mortgage products without forewarning customers.
The bank then scrapped the policy after announcing a review of the personal circumstances of each customer affected by its changes to redraw limits following widespread criticism of the move from various quarters.
ASIC voiced its concerns over ME Bank’s handling of the redraw issue, telling the economics committee that it “could have and should have been handled better”.
ME Bank is due to be acquired by the Bank of Queensland, with the transaction expected to be finalised by the end of this financial year (and, by latest, August).
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.