ME will be joined by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) at an "urgent public hearing". 

ME's appearance is in response to some discrepancies found in chief executive James McPhee's responses given to ASIC at an earlier hearing, in regards to ME's controversial decision to reduce redraw limits on mortgages without warning (which has since been reversed). 

"We note that the statements made by Mr McPhee at the hearing did not fully reflect the extent of ME Bank's communication with ASIC on the redraw issue," ASIC chair James Shipton said in a letter to Liberal MP and chair of the House of Representatives standing committee on economics Tim Wilson. 

Yesterday, Mr Wilson said that "Australians who take out a banking product expect it to be available when they need it, not nabbed in the middle of the night without notification".

"The discrepancy between ME Bank’s evidence to the committee and advice from ASIC is deeply concerning and requires further scrutiny," Mr Wilson said. 

The hearing takes place from 12pm to 1pm today. 

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

What's the issue? 

In early May, ME Bank outraged customers and caught the eye of regulators when it made changes to redraw facilities without giving customers prior warning. 

The bank angered its borrowers when it drastically reduced the amount they could redraw from their home loans, meaning many lost access to thousands of dollars worth of extra repayments they'd made. 

In total, around 20,000 customers were impacted. 

In the immediate aftermath, Mr McPhee issued a statement saying the change was made to prevent customers from falling behind their original repayment schedules during the height of the COVID-19 pandemic. 

“Our assessment showed there was a group of customers who were at risk of going above their scheduled home loan balance, if they were to activate the full redraw facility,” Mr McPhee said.

“We adjusted their redraw facility to be in line with their original repayment schedule.

“In the current environment, we thought it particularly important to ensure that customers were not inadvertently at risk of not meeting their repayment commitments.”

The main issue with this was that ME Bank didn't contact customers before doing so - Financial Counselling Australia chief executive Fiona Guthrie told Savings.com.au at the time that if the bank was so concerned about customers it should’ve talked with them before making the changes.

“If ME wanted to help those customers who are experiencing financial hardship, they should have spoken with them first and asked what they could do to alleviate some of their financial stress,” Ms Guthrie said.

In 2018, the Commonwealth Bank (CBA) made changes to how minimum repayments were calculated, but actively contacted customers a month beforehand to warn them of the coming change. 

At a hearing on 14 May, Mr McPhee told the committee the bank notified ASIC of the changes and next heard from the regulator once the issue had been made public in the media - they're supposed to give customers 20 days notice, according to federal credit legislation. 

However, a letter obtained by The Age and The Sydney Morning Herald from Mr Shipton to the parliamentary inquiry shows that ME's account of its communication with ASIC is inaccurate.

More information will be revealed during the hearing at 12, webcast at aph.gov.au/live.





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