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ME Bank to appear in ‘urgent’ parliamentary hearing

by Annie Kane11 minute read
ME Bank to appear in ‘urgent’ parliamentary hearing

The standing committee on economics is holding an “urgent public hearing” this week to question ME Bank about its redraw controversy and the “security and flexibility of the savings of Australians with their mortgage products”.

Earlier this month, super fund-owned lender ME Bank reduced the amount borrowers could redraw from specific legacy mortgage products, without forewarning customers. 

While permitted under ME’s terms and conditions, the policy decision was met with backlash from customers, brokers and the broader community. Many affected customers took to social media to lambast the bank for failing to notify them of the change. For some customers, the change reportedly meant that they were unable to access money that they had hoped to later withdraw – in some cases thought to be tens of thousands of dollars.

In response, ME later announced that it would “change back” home loan redraw limits for any customers who wish to opt out. The bank has also acknowledged that the policy was “poorly communicated” and had “upset customers”.

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Following on from the controversy, the House of Representatives’ standing committee on economics has now called an “an urgent public hearing” this Thursday (14 May 2020) to hear from ME Bank and Industry Super Australia.

The hearing, to be conducted by videoconference as part of its ongoing review of the four major banks and other financial institutions, will seek to address concerns raised.

The chair of the committee, Tim Wilson MP, commented: “Australians who put their savings into the bank or entrust it with a superannuation fund rightly expect it to be secure.

“The conduct of ME Bank has raised urgent questions about the security and flexibility of the savings of Australians with their mortgage products and necessitates scrutiny,” Mr Wilson said. 

“Australians trust superannuation funds with significant savings, they hold a fair expectation that funds will provide accurate information and will act promptly if they are eligible for early withdrawal. The conduct of Industry Super Australia in publishing dubious calculations about the impacts of early withdrawal will be examined, as will processes to stop fraud.

“Members’ equity should be paramount, and concerns about liquidity also need to be answered. It was only in November last year that the sector dismissed this committee’s concerns about liquidity prompted by substantial investments by funds in illiquid assets,” Mr Wilson added.

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AUTHOR

Annie Kane is the managing editor of Momentum's mortgage broking title, The Adviser.

As well as leading the editorial strategy, Annie writes news and features about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape.

She is also the host of the Elite Broker, New Broker, Mortgage & Finance Leader, Women in Finance and In Focus podcasts and The Adviser Live webcasts. 

Annie regularly emcees industry events and awards, such as the Better Business Summit, the Women in Finance Summit as well as other industry events.

Prior to joining The Adviser in 2016, Annie wrote for The Guardian Australia and had a speciality in sustainability.

She has also had her work published in several leading consumer titles, including Elle (Australia) magazine, BBC Music, BBC History and Homes & Antiques magazines.