ME Bank duds customers by removing their access to funds in their home loan redraw accounts
Industry-super fund-run bank ME has come under fire for denying customers access to their own money sitting in redraw accounts.
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Industry-super fund owned bank ME has come under fire for removing available funds from customers’ home loan accounts.
The Melbourne-based financial institution left an estimated 20,000 customers without access to their own money they had parked in their home loan redraw accounts in the past week.
A home loan redraw account is a linked facility which sits within a mortgage – it usually has amounts which are overpaid on the loan in it – and they can be drawn back by the customer at any time.
ME, which has 560,000 customers, said the impacted accounts were legacy home loans that were opened more than five years ago.
The bank removed the ability to access some redraw amounts to ensure customers did not fall behind the original repayment schedules.
The bank’s Facebook page was inundated with complaints from livid customers voicing their annoyance at having available funds suddenly removed.
Customer Michael Hall wrote said he had funds removed “without notice”.
“I have always had a redraw balance included in my home loan, to remove $16,000 of this is disgusting,” he said.
“I would rather have that than a little used credit card.”
Another customer Reece Vandermeyden wrote, “What a disgrace changing my redraw account without letting me even know. I’ll be leaving as soon as my fixed period is finished. Do not use this bank.”
Financial comparison website RateCity’s spokeswoman Sally Tindall said the change to available redraw amounts was “shocking particularly at a time when a lot of households are already doing it tough”.
“Customers often put spare cash in their home loan thinking it’s a safe place to store emergency funds,” she said.
“ME’s decision comes in the middle of a crisis when a lot of families could be counting on this money.”
She urged impacted customers to contact the bank as soon as possible.
In an issued statement an ME spokesman said the redraw amounts were changed to ensure some customers did not fall behind their original repayment schedules.
“We understand that the change has caused concern to some customers particularly in the current environment,” he said.
“We are reviewing the personal circumstances of each customer affected and are committed to working with them to determine how we can help with their individual financial needs.”
The bank said it was rearranging financing at the bank’s expense for customers whose redraw limits amounts had been reduced.
Financial adviser Scott Haywood said ME’s move was “a concern”.
“In financial services everything now is about best interests so I hope ME are operating in the best interests of customers and not themselves,” he said.
Originally published as ME Bank duds customers by removing their access to funds in their home loan redraw accounts