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”.
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.