ME Bank criticised by banking watchdog

Company News

by Michael Luu

The Banking Code Compliance Committee (BCCC) has highlighted ME Bank (Members Equity Bank) as a violator of the banking code of conduct.

The banking watchdog alleged that the Melbourne-based direct bank implemented incompetent redraw reforms that seriously and systematically contravened with the industry’s code of practice.

ME Bank disabled the accessibility of redraw accounts to a substantial number of clients last year, abruptly cutting them off from extra funds they have paid in excess of their required payments for their mortgage.

While the banking institution was within legal rights to introduce these changes, the BCCC found that ME Bank failed to deliver sufficient notice to customers about the changes prior to their execution.

The bank was subsequently forced to abolish these changes in response to criticism over its mishandling of reforms.

While the banking-monitoring body has not issued any fines, the BCCC reprimanded the bank’s shortcoming in providing “timely, clear and useful communication” to customers in its annual report released today. The regulator emphasised ME Bank’s timing of the adjustments showed a lack of empathy for “those who experiencing vulnerable circumstances or those whose financial situations were exacerbated due to the impacts of COVID-19”.

Shares in ME's soon-to-be parent company Bank of Queensland (ASX:BOQ) are trading almost 1 per cent lower at at $9.10