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Bank refunds over $230k in overcharged interest

by Reporter3 minute read

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A Tasmanian bank has refunded over $230,000 in overcharged interest and fees to more than 1,040 customers with mortgage offset accounts.

A customer of MyState Bank Limited (MyState) reportedly contacted the bank to enquire about their offset accounts being linked to their mortgage.

After conducting a review into why the accounts were not linked, MyState found several customers had loans with unlinked offset accounts, while others had offset accounts but no loans, and some had offset accounts together with ineligible loan products.

This therefore meant that they were overcharged interest.

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Further, some were found to have been charged "offset account" fees after their loan had been discharged, or changed to a kind that could not be linked to an offset account.

According to the bank, this was due to errors in MyState’s manual administration processes. These resulted in failures to link loans and offset accounts, and failures to deal with offset accounts when loans were switched or discharged.

The Australian Securities & Investments Commission (ASIC) revealed that the matter was reported by the bank, and that the Tasmanian lender "has worked with ASIC to refund customers and improve its internal processes, including by ensuring employees have appropriate account administration training".

It has since paid more than $230,000 to more than 1,000 customers.

"Banks need to ensure that their products are delivering the benefits that they are promoting," ASIC deputy chair Peter Kell said.

"This is another example of a single customer complaint revealing a systemic issue, and we are pleased that MyState has taken the appropriate action in response."

MyState has contacted customers who are eligible for a refund.

The bank said: "MyState is committed to maintaining the highest level of integrity throughout its business. When MyState became aware of an issue related to a small number of offset accounts it moved quickly to contact affected customers, restore fees and interest, and proactively reported the situation to ASIC. The refunds were completed in October 2016, and process changes have been made to avoid a repetition of the issue."

 

Bank refunds over $230k in overcharged interest
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