ME Bank has appeared before the Federal Court, facing criminal charges for allegedly making false and misleading representations in letters to its home loan customers.
It had been alleged it failed to provide written notice about annual interest rate and repayment amount changes.
The bank, now owned by the Bank of Queensland, was under industry superannuation fund ownership at the time of the allegations.
A total of 62 charges were laid against ME Bank, which included 44 charges that related to letters issued by ME Bank to home loan customers between September 2016 and September 2018.
The Australian Securities and Investments Commission (ASIC) alleged these letters made false and misleading representations about:
- Customers’ relevant annual interest rates;
- The minimum repayment to be paid after the fixed-rate period expired; and
- The minimum repayment to be paid after the interest-only rate period expired.
A further 18 charges related 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 alleged this misconduct occurred due to failures in ME Bank’s systems and processes.
The matter was being prosecuted by the Commonwealth Director of Public Prosecutions (CDPP) and would return to court on 3 November, 2021.
Regarding the proceedings, BOQ said: "These issues were self-reported by ME to ASIC in October 2018 and remediation paid to all affected customers in 2019 was approximately $105,000.
"BOQ Group was aware of this matter during the due diligence process for the acquisition of ME Bank. BOQ Group has been engaging constructively with the CDPP to work towards a way forward. As these matters are before the Court, BOQ Group does not intend to comment further at this time."