“Certainly the bank has received a ‘Please explain’ from all of the major shareholders because in the current environment to allow a perception you’re behaving worse than the Commonwealth Bank is terrible,” the trustee said. “Look, it’s a colossal f— up.”
The trustee said it was not uncommon to change the terms and conditions of redraw facilities but the lack of communication to customers, especially during the economic uncertainty of the coronavirus pandemic, was “completely unforgivable.”
Other major ME Bank shareholders, AustralianSuper and Cbus, declined to comment.
Chair of standing committee on economics Tim Wilson issued a list of questions to ME Bank on Monday about its relationship with shareholders, including whether the bank provided capital to industry funds Rest or Hostplus.
“Is ME Bank providing loans to industry funds to address the liquidity issues and as a consequence they need to make money from peoples’ offset accounts to maintain its prudential risk profile?” Mr Wilson said. “It is very strange for a bank to have done this which is why the response has been so strong in the public square.”
Hostplus and Rest, super funds that represent the beleaguered hospitality and retail sectors, processed nearly a quarter of requests for the government’s early access to super scheme in its first two weeks. Future Fund chairman Peter Costello said funds with members working in one or two industries was a “real issue” for maintaining liquidity and risk.
The Australian Prudential Regulation Authority deputy chair Helen Rowell declined to comment on ME Bank, but said there were “pros and cons” for super funds having uniform membership bases. “Funds would say that knowing and understanding their membership base and having close connections with employers in a particular industry can have benefits as well.”
ME Bank chief executive Jamie McPhee sent a letter to shareholders on Sunday in response to reports by The Age and Sydney Morning Herald that questioned whether the bank had breached banking standards.
“This is an adjustment to redraw accounts and is not a change to a product, which is what the Code of Banking Practice is referring to,” Mr McPhee wrote.
The former Adelaide Bank managing director positioned the policy change as an attempt to protect customers from failing to meet repayment commitments.
“We did this because some customers could be at risk of not meeting their repayment commitments, potentially leaving them open to financial hardship at the end of the loan term,” Mr McPhee said.
Charlotte is a reporter for The Age.