Liberal MP Tim Wilson has called for industry super fund-owned ME Bank and the financial regulators to appear for a parliamentary hearing, after ASIC contradicted claims the bank made around its controversial redraw facility.
Mr Wilson, who is chair of the House of Representatives standing committee on economics, indicated on Monday that he had asked the committee secretariat to call a hearing later in the week, after ASIC chair James Shipton responded to questions about ME Bank.
Mr Wilson had asked the corporate regulator if the bank had presented accurate evidence to the committee when it appeared around two weeks ago for an emergency hearing held after the bank changed redraw minimums on home loan products without properly notifying customers.
The redraw facility allows customers to deposit money ahead of their loan repayment schedule, with the cash also being able to be withdrawn – but the bank had decided to reduce its redraw limits in fear of customers falling behind on home loans.
After initial media reports broke of the ASIC response on Monday, Mr Wilson posted the letter from Mr Shipton on Twitter, which said that ME Bank chief executive Jamie McPhee had not fully reflected the extent of the bank’s communication with ASIC on the redraw issue.
“@ASICMedia replied to my letter re if @MEBank CEO [Jamie McPhee’s] evidence the [House] Eco Committee was accurate re closing redraws without consultation. In short: no”, Mr Wilson tweeted.
“So I’m directing the secretariat to recall the bank and ASIC this Wed.”
Mr McPhee’s statement had indicated that ASIC had only notified the bank it received the information when ME Bank alerted the regulator of a redraw issue.
But Mr Shipton wrote that after ASIC was notified, it discussed the issue with ME Bank in a meeting and had sought further updates.
According to a timeline provided by Mr Shipton, ME Bank had submitted a self-report to ASIC’s Misconduct and Breach Reporting (M&BR) team regarding the occurrence of a redraw issue on 10 December. It was not a formal breach report under the Corporations Act.
On 18 December, ME Bank representatives, including Mr McPhee met with ASIC’s Financial Services Group (FSG) for a regulator six-monthly meeting, where the issue of the redraw was raised and discussed.
During the meeting, Mr Shipton, said the FSG team had noted “it was important that ME Bank communicated effectively with customers to explain why these changes were being made i.e. to fix a system problem”.
The bank was said to advise that a remediation and communications plan was being developed and updates would be provided to ASIC.
At the end of March, the regulator’s M&BR team requested an update on the issue, with ME Bank complying roughly two weeks later. The regulator then sought further clarification on ME Bank’s update and the bank gave a response on 23 April.
From 23 to 27 April, the bank made adjustments to customer redraw facilities, as part of its treatment plan for the issue, but following media coverage saw a public outcry, with speculation that customers were having their access to cash minimised during the COVID-19 crisis.
ME Bank then reversed out of the policy change for customers who wanted it and Mr McPhee publicly apologised, stating: “We are deeply sorry; we were trying to do the right thing but we went about it the wrong way”.
But during the December meeting and prior updates, Mr Shipton said “there was no further opportunity for ASIC to raise concerns around ME Bank’s remediation and communication strategy before the bank made adjustments to customers’ redraw facilities… because they started making changes to redraw amounts on the same day as their clarification to M&BR.”
ASIC reported that since 3 May, it has been in regular contact with ME Bank. It has also had discussions with APRA, with Mr Shipton saying it would continue to do so until the matter was resolved.
“ASIC has raised this inconsistency in Mr McPhee’s statements with ME Bank, and understands that ME Bank intends to correct the record in their responses to further questions the committee has raised with ME Bank directly,” Mr Shipton’s letter stated.
During the hearing in May, Mr McPhee also revealed the bank has never paid a dividend to the 26 industry super funds that own it.
Mr Wilson speculated the lack of returns could be at odds with the funds’ responsibility to invest in members’ interests.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
Assets in Australian active and strategic-beta exchange-traded products more than doubled last year according to a new report. ...
Pendal Group recorded $2.5 billion in net outflows during the three months leading to June, with clients shifting $1 billion from European s...
Citigroup saw its net income for the second quarter of the year plummet by 73 per cent from its year before, as the pandemic increased credi...