Yahoo Finance understands ASIC has launched proceedings against ME Bank for allegedly not informing customers of changes to its interest rates within the required period.
While not revealing much in its public statement, ASIC will allege ME Bank had made false or misleading representations.
Yahoo Finance understands the representations related to ME Bank failing to notify customers about interest rate changes attached to its home loans, as required under the ASIC Act and National Credit Code.
The corporate regulator will allege the bank contravened the ASIC Act by making one or more false or misleading representations with respect to the price of their services.
ME Bank made the misrepresentations between 2 September 2016 and 3 September 2018, ASIC alleges.
Additionally, ASIC will accuse the bank of not notifying customers within the 20 day requirement when it makes changes to the amount, frequency, time of payment or method of calculation for home loan repayments.
All offences alleged by ASIC are “strict liability” offences, which senior associate at Hunt & Hunt Lawyers Lauren Boyd told Yahoo Finance means the bank would be liable regardless of whether or not they intended to commit the offences.
“They could rely on 'a mistake of fact' defence, though that would be difficult,” Boyd said.
“If convicted, ME Bank could be fined up to $22,200 for each contravention under the credit code and up to $444,000 for each contravention under the ASIC Act.”
It is not clear how many contraventions occurred over the span of two years.
Yahoo Finance reached out to ASIC for comment, but a spokesperson said they will not be commenting prior to the first hearing.
No date has been set yet for the hearing and the matter will be handled by the Commonwealth Director of Public Prosecutions.
ME Bank in hot water again
Back in April last year, ME Bank was accused of silently shifting out customers' money available in their home loan redraw facility.
Angry customers said at the time that moving the money into the loan account made the cash inaccessible during a financially stressful time at the height of COVID.
The Banking Code Compliance Committee confirmed this month it had sanctioned ME Bank for its actions last year.
The BCCC’s chair, Ian Govey, said efficient and effective communication with customers is a paramount requirement of the Code.
“ME Bank’s failure to rectify long-standing system issues was a contributing factor to its poor conduct at the time it made the adjustments to customers’ redraw amounts,” Govey said.
“It was imperative that ME Bank notified customers prior to making any adjustments to their redraw facilities, especially given the changes took place when the COVID-19 pandemic was significantly affecting customers’ livelihoods.
“ME Bank should have given special consideration to the potential health impacts its communications, or lack thereof, would have had on customers at that time.”