ME Bank’s chief executive has apologised to customers who suddenly had the amount they could redraw from home loans slashed by thousands of dollars.
“We are sorry,” Jamie McPhee said in a statement posted to the bank’s website on Tuesday.
“Our priority is to fix this situation and to regain the trust of our customers. We can and we will do better.”
McPhee also rejected the suggestion the bank had an ulterior motive for cutting redraws and said it was in a strong financial position.
However, he stopped short of reversing the move, which is estimated to have affected about 20,000 home loan borrowers.
The apology follows intense pressure on ME Bank from some of its industry super fund owners and the union movement, which is an important marketing channel for the bank.
Redraw facilities allow home loan customers who have made extra payments on their mortgage to borrow additional money.
Outraged customers flooded ME Bank’s Facebook page last week, saying the bank had without notice reduced the amount they could redraw from their home loans by as much as $20,000.
Over the weekend industry funds, the prudential regulator and the Australian Council of Trade Unions all demanded the bank explain what had happened.
In his statement, McPhee said ME Bank cut redraw amounts “with the best of intentions – to protect some customers from the risk of redrawing too much money, which could have inadvertently put them behind their repayment schedule”.
“But we messed up,” he said.
“We should have worked harder to explain a complex product and process simply so that redraw limits were better understood.”
He said affected customers were eligible for an assistance package that included extending the length of the loan to reduce the size of repayments, refinancing the loan and a six-month deferment of repayments.
Victorian Liberal MP Tim Wilson has linked the move to ME Bank’s industry fund ownership, asking if the bank was bailing out funds whose members have rushed to redeem their savings due to the coronavirus crisis.
But McPhee said that the bank’s “only intention was to stop customers getting into financial difficulty”.
“The bank never benefited from this decision,” he said.
“Rumours about other motives are simply untrue. The bank is in a strong financial position and our capital and liquidity levels are well above both internal targets and regulatory requirements.”
