ME Bank fined $820k for misleading borrowers
ME Bank has been fined by the Federal Court after it was found to have provided inaccurate information about its home loans to customers.
The matter, prosecuted by the Commonwealth Director of Public Prosecutions, followed an investigation and referral by ASIC.
The regulator found the bank sent 589 letters to home loan customers between May 25, 2018, and September 3, 2018, informing them of incorrect minimum repayment amounts to be paid after the expiry of either a fixed-rate or interest-only period.
Each of the letters contained a repayment amount that was less than the actual amount required to repay the loan.
Between December 28, 2016, and February 23, 2018, ME Bank also neglected to send letters to certain customers regarding changes in interest rates and minimum repayment amounts after the expiration of an interest-only or fixed-rate period.
The bank pleaded guilty to all charges.
ASIC executive director for enforcement and compliance Tim Mullaly says banks are expected to properly notify and update customers who are entitled under the law to receive accurate information about changes to their loans.
"Where banks fail to meet these requirements, they can face criminal convictions," Mullaly says.
Impacted customers have been remediated.
ME Bank, which had been owned by a group of industry super funds since 1994, became a subsidiary of Bank of Queensland (BOQ) in 2021.
This article first appeared on Financial Standard
Get stories like this in our newsletters.
