ME Bank has backed down in the face of overwhelming anger from customers who had the amount they could redraw from their home loans slashed by thousands of dollars.
The bank, which is owned by 26 industry super funds, said on Tuesday it would now “change back home loan redraw limits for any customers who want it”.
Chief executive Jamie McPhee issued an apology for the debacle, his second this week, saying the bank was “deeply sorry”.
“We were trying to do the right thing but we went about it the wrong way,” he said.
As recently as Wednesday the bank was standing firm on the policy, despite waves of outrage from customers whose redraw limits had suddenly been cut by as much as $20,000, a request to explain the move from the prudential regulator and intense pressure from unions and some of its industry super shareholders.
The bank said the move, which affected an estimated 20,000 customers, was designed to protect borrowers.
Redraw arrangements allow home loan customers who have made extra payments on their loans to dip back into the loan and borrow extra money.
ME Bank said it discovered that some redraw limits were too high, raising the risk that customers who used the facility would fall behind on their loans.
But on the bank’s Facebook page, alarmed customers spoke of their shock at the move.
“The money we lost is actually my husband’s redundancy payment as he was retrenched last week,” one customer said in a post to the page a fortnight ago.
“We are not eligible for Centrelink payments and were relying on those funds to get us through,” she said.
The bank has set up a hotline and a website for customers who want their redraw limit changed back.
“I would like to reassure customers that at no point did the bank ‘remove funds from customer accounts’ or ‘transfer’ any customer funds,” McPhee said.
“Nor was the adjustment made for liquidity reasons.
“Our priority now is to help, support and service our customers. We recognise that we need to do better, we can and we will.”
