The Banking Code Compliance Committee (BCCC) has sanctioned Members Equity Bank (ME Bank) for serious and systemic breaches of the Banking Code.
The BCCC found that ME Bank’s communications to impacted customers about changes to their redraw amounts in April 2020 were poor and ineffective. The Code’s Guiding Principles require banks to be accountable and transparent in their dealings with customers.
This is a Banking Code Compliance Committee media release, originally published on 4th May, 2021.
The BCCC’s Independent Chairperson, Ian Govey AM, 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,” Mr 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.”
On 8 May 2020, ME Bank publicly apologised for its poor communication and decided to change back redraw limits for any impacted customers who requested it. Subsequently, ME Bank contacted all customers who had their redraw amounts reinstated to:
- understand individual customers’ situations and assist them based on their needs
- educate customers on their redraw feature and the financial consequences of accessing redraw amounts, and
- rebuild trust with customers.
ME Bank is also implementing a Management Action Plan to understand what occurred leading up to the events of April 2020, why it occurred and how the bank can improve customer outcomes moving forward.