ME Bank penalised $820k by Federal Court
ME Bank has been ordered to pay $820,000 by the Federal Court for pleading guilty to criminal charges of making false and misleading representations and failing to provide written notices regarding home loans.
Between 25 May 2018 and 3 September 2018, ME Bank sent 589 letters to home loan customers 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 28 December 2016 and 23 February 2018, ME Bank also failed to send letters to some customers to inform them that the interest rate and minimum repayment amount was changing after the expiry of an interest-only or fixed-rate period.
ME Bank pleaded guilty to charges of:
- Making false and misleading representations in letters to its home loan customers, in contravention of sections 12DB(1)(g) and 12GB(1) of the Australian Securities and Investments Commission Act 2001; and
- Failing to provide written notice about annual interest rate and repayment amount changes, in contravention of ss 64(1) and 65(1) of the National Credit Code.
ASIC executive director for enforcement and compliance, Tim Mullaly, said: “This misconduct arose from ME Bank failing to send accurate home loan information to its customers. 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.”
The penalty was comprised of $750,000 for the charge under the ASIC Act, and $70,000 for charges under the National Credit Code (as set out in the National Consumer Credit Protection Act 2009).
The matter was prosecuted by the Commonwealth Director of Public Prosecutions following an investigation and referral by ASIC. Impacted customers have been remediated by ME Bank.
Founded in 1994, ME Bank was acquired by the Bank of Queensland (BOQ) in July 2021 for a cash consideration of $1.3 billion and was fully funded through BOQ's equity raising.
AUTHOR
Laura Dew
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