ME Bank has appeared in Federal Court, facing criminal charges for allegedly making false and misleading representations in letters to its home loan customers.
It is also alleged that the bank failed to provide written notice about annual interest rate and repayment amount changes.
A total of 62 charges have been laid against ME Bank; 44 charges relate to letters issued by ME Bank to home loan customers between September 2016 and September 2018.
ASIC alleges customers were misled about their interest rate, the minimum repayment after the fixed term expired and the minimum payment to made after the interest only period expired.
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A further 18 charges relate to ASIC allegations that, between December 2016 and February 2018, ME Bank failed to give written notice to home loan customers that their annual interest rates and minimum repayment amounts were changing after their interest-only rate and/or fixed-rate period expired.
The matter will next be heard in November. This is the first criminal prosecution under consumer protection provision s12DB of the ASIC Act.
In February, Bank of Queensland moved to acquire ME Bank from the industry super funds that owned the bank for more than $1.3 billion.
The bank faced scrutiny in 2020 after some legacy customers had their mortgage redraw facilities adjusted, allegedly without notice. Chief executive James McPhee resigned shortly afterwards, with Adam Crane stepping into the position.
A spokesperson for Bank of Queensland said: "Bank of Queensland Group (BOQ Group) can confirm a case management hearing in the Federal Court occurred on 14 September 2021 in relation to proceedings against ME Bank for alleged contraventions of the Australian Securities and Investments Commission Act 2001 (Cth) and National Credit Code. The alleged contraventions concern home loan customer communications over a two year period ending September 2018. These issues were self-reported by ME to ASIC in October 2018 and remediation paid to all affected customers in 2019 was approximately $105,000. BOQ Group was aware of this matter during the due diligence process for the acquisition of ME Bank. BOQ Group has been engaging constructively with the CDPP to work towards a way forward."