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Bank of Queensland’s problem child faces court on criminal charges

Bank of Queensland’s wholly owned Members Equity Bank Limited has faced the Federal Court on dozens of criminal charges for allegedly making false and misleading representations in letters to its home loan customers. 

Sep 15, 2021, updated Sep 15, 2021
The ME Bank faced criminal charges in the Federal Court

The ME Bank faced criminal charges in the Federal Court

The charges were brought by the Australian Securities and Investments Commission and follow the $1.3 billion takeover of ME Bank by BoQ earlier this year, well after the alleged events occurred.

ASIC said a total of 62 charges had been laid against ME Bank.

Of the total, 44 charges related to letters issued by ME Bank to home loan customers between September 2016 and September 2018, which ASIC alleges made false and misleading representations about customers’ relevant annual interest rates and the minimum repayment to be paid after fixed-rate or minimum rate periods expired.

“A further 18 charges relate to ASIC allegations that, between December 2016 and February 2018, ME Bank failed to give written notice to home loan customers that their annual interest rates and minimum repayment amounts were changing after their interest-only rate and/or fixed-rate period expired,’’ ASIC said.

“ASIC alleges this misconduct occurred due to failures in ME Bank’s systems and processes.

“The matter is being prosecuted by the Commonwealth Director of Public Prosecutions following an investigation and referral by ASIC.’’

ASIC said this was the first criminal prosecution under new consumer protection provisions and were originally filed in Federal Court in May.

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Making false and misleading representations to customers with respect to the price of services in connection with the supply of financial services is an offence which carries a maximum penalty between $1.8 million and $2.1 million.

A credit provider’s failure to notify customers of interest rate changes or repayment rates are offences for which the fine was $90,000 and $105,000.

Bank of Queensland said the issues central to that charges were self-reported by ME to ASIC in October 2018 and remediation paid to all affected customers in 2019 was approximately $105,000.

 BOQ also said it was aware of this matter during the due diligence process for the acquisition of ME Bank.

 ME Bank has previously publicly apologised for what it said was poor communication and decided to change back redraw for any impacted customers who requested it. Subsequently, ME Bank contacted all customers who had their redraw amounts reinstated.

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