Melbourne-based lender ME Bank has canceled its policy which allowed it to withdraw money from clients’ accounts after a fierce reaction from its mortgage borrowers.
Members Equity Bank, owned by industry super-funds, withdrew funds from 20,000 clients redesign accounts to repay home loans last week without proper notification.
Redraw mortgage-linked accounts usually consist of excess money on the loan and can be withdrawn by the borrower at any time.
But since last week, ME Bank has been using redesigned accounts directly to repay home loans, as fears arose that borrowers would find it difficult to repay loans amid the financial crisis caused by the coronavirus.
The lender announced this morning that it would cancel this policy, modifying the limits for redefining the mortgage for all customers who want it.
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“Some of our customers have told us that they want their redefinition limits to be the way they were before,” said general manager Jamie McPhee. “We are going to do it.
“We have set up a dedicated hotline for all customers who want their redrawing limits changed or, if they prefer, they can request it online.
“We are deeply sorry; we were trying to do the right thing, but we did it the wrong way. “
ME Bank has been unanimously criticized by clients and financial advocates who have stated that the lender has abused the confidence of its borrowers by accelerating the policy change.
But Mr. McPhee said that the lender’s poor communication has led to a misunderstanding.
“I want to reassure customers that at no time did the bank” withdraw funds from customer accounts “or” transfer “customer funds. The adjustment was also not made for reasons of liquidity, “he said.
“Our priority now is to help, support and serve our customers. We recognize that we have to do better. We can and we will. “
The controversial ME Bank decision sparked a constant stream of abuse from furious customers sharing their frustration on the company’s Facebook page.
“Absolutely disgusting treatment by a bank helped you redesign it without any communication,” said one user.
And another: “What a shame to change my redesigned account without letting me know. I will leave as soon as my fixed period is over. Do not use this bank. “
The head of the state-of-the-art financial adviser, Fiona Guthrie, said that the lender had abused the trust of its clients.
“The bank did this condescendingly,” she told news.com.au.
“He investigated a problem with these accounts and did not give people the opportunity to discuss with them the best option for these customers and their particular financial situation.”
Guthrie said increasing redesigned accounts by making payments above the loan requirement was a responsible way to raise funds for access during leaner times, such as an economic crisis caused by a pandemic .
“The point of redesigning is that it gives people flexibility,” she said.
“The banks are marketing this at the right times as the forerunner, so you can’t just turn it off when the situation arises where you think it would be useful for people.
“Even if they have the legal right to do so, but ethically and in terms of community expectations, this does not add up.”
Financial Rights Legal Center case manager Alexandra Kelly said the bank’s timing and behavior were “appalling.”
“First, the communication was not fair, timely or appropriate – most were done after the fact,” she said in a statement to news.com.au.
“Inform consumers after access is closed that consumers think their money is insulting, especially in these difficult times.”
Kelly said the legal center has been contacted by ME Bank customers who have been encouraged to put lump sums into their redesign with the assurance that it will be available in the event of an emergency or future needs.
“Now that this need has arisen, the safety net has apparently been pulled from below,” she said.
ME Bank customers confused by the action are encouraged to call the lender’s dedicated hotline for the problem at 1300 308 357 or to visit mebank.com.au/changebackredraw.
Originally posted under Bank “deeply sorry” after return