ME Bank faces criminal charges
Members Equity Bank appeared before the Federal Court yesterday, facing criminal charges for allegedly making false and misleading representations to customers and failing to provide written notice about annual interest rate and repayment amount changes.
According to the Australian Securities and Investments Commission (ASIC), this is the first criminal prosecution under consumer protection provision s12DB of the ASIC Act.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions following an investigation and referral by ASIC.
ASIC says a total of 62 charges have been laid against ME Bank. Of these, 44 charges relate to letters issued by ME Bank to home loan customers between September 2016 and September 2018.
ASIC alleges ME Bank made false and misleading representations about customers’ relevant annual interest rates, the minimum repayment to be paid after the fixed-rate period expired and the minimum repayment to be paid after the interest-only rate period expired.
This kind of offence can incur a maximum penalty of between $1.8 million and $2.1 million.
ASIC also alleges that ME Bank failed to give written notice to home loan customers between December 2016 and February 2018that their annual interest rates and minimum repayment amounts were changing after their interest-only rate and/or fixed-rate period expired. A further 18 charges relate to this.
ASIC alleges this misconduct occurred due to failures in ME Bank’s systems and processes. It says this kind of offence can incur a maximum penalty of between $90,000 and $105,000.
The matter will next return to court on 3 November 2021.
ME Bank was formerly owned by industry super funds before being sold to Bank of Queensland in a $1.3 billion deal earlier this year.