The bank failed to send accurate home loan info to its customers
Members Equity Bank (ME Bank) has been ordered by the Federal Court to pay a $820,000 penalty following its guilty plea to criminal charges involving false and misleading representations and failure to provide necessary written notices regarding home loans, ASIC reported.
From May 25, 2018 to Sept. 3, 2018, ME Bank sent 589 letters to home loan customers with incorrect minimum repayment amounts after the expiration of fixed-rate or interest-only periods. Each letter contained a repayment amount less than the actual required sum.
Also, from Dec. 28, 2016 to Feb. 23, 2018, ME Bank failed to notify some customers about changes in interest rates and minimum repayment amounts after the conclusion of interest-only or fixed-rate periods.
“This misconduct arose from ME Bank failing to send accurate home loan information to its customers,” said Tim Mullaly, ASIC executive director for enforcement and compliance.
“Banks are expected to properly notify and update customers who are entitled under the law to receive accurate information about changes to their loans. Where banks fail to meet these requirements, they can face criminal convictions.”
The $820,000 penalty comprises $750,000 for the ASIC Act charge and $70,000 for charges under the National Credit Code (as outlined in the National Consumer Credit Protection Act 2009).
ME Bank pleaded guilty to making false and misleading representations in violation of the ASIC Act and failing to provide written notice about annual interest rate and repayment amount changes under the National Credit Code.
The case was prosecuted by the Commonwealth Director of Public Prosecutions following an ASIC investigation and referral. ME Bank has already remediated impacted customers.
ASIC said the case marks the first criminal prosecution under section 12DB of the ASIC Act. The charges were filed in the Federal Court on May 25, 2021 (21-116MR). In March 2019, the maximum penalties for a body corporate contravening sections 12DB and 12GB of the ASIC Act, and sections 64(1) and 65(1) of the National Credit Code, increased for conduct after that date.
To access the media release, click here. You can also download the judgement and orders.
To read other ASIC stories, click here and here.
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