ME Bank facing criminal charges over allegedly misleading home loan customers

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ME Bank is in hot water again, and America's largest university endowment goes green.

Here are five things you might've missed this week.

Me Bank faces criminal charges

me bank charged

Members Equity Bank (ME Bank) is facing criminal charges for allegedly making misleading statements to home loan customers and for failing to notify them of rate increases and repayment charges.

In total, 62 charges have been brought before Federal Court in relation to the matter. Forty-four of them relate to letters issued by ME Bank to home loan customers between September 2016 and September 2018, which included:

  • false and misleading representations about customers' relevant annual interest rates and/or 
  • the minimum repayment to be paid after the fixed-rate period expired, and/or
  • the minimum repayment to be paid after the interest-only rate period expired.

The remaining charges concern ME Bank's failure, between December 2016 and February 2018, to provide home loan customers with written notification of rate increases and minimum repayment charges after their interest-only rate and/or fixed-rate period expired.

If all charges are upheld, they face a total penalty of $94.3 million.

The actions follow an ASIC investigation and referral, with the next court session scheduled to take place on November 3, 2021.

Earlier this year, the bank was in unrelated hot water for failing to notify customers of changes to its redraw facilities. About 20,000 ME Bank customers had the amount they could redraw from their home loan slashed by up to $20,000.

Maple-Brown Abbott launches Asian dividend growth fund

Maple-Brown Abbott is looking abroad for dividends, having launched an Asian equities fund aimed at delivering a combination of growth and consistent income.

While the Asian Dividend Growth Fund will be benchmark unaware, its dividend yield will aim to outperform the MSCI All Countries Asia excluding Japan Net Index. The fund will hold 25-40 high conviction stocks that offer sustainable and growing income.

"The Asia region is home to more companies with a net cash balance sheet than anywhere else in the world, and there are many companies across the region with the potential to significantly increase their returns to shareholders," says Geoff Bazzan, head of Asia Pacific equities and co-portfolio manager for the new fund.

"As well as having the world's strongest balance sheets, Asian corporates have typically adopted a more conservative approach to capital management, with an average payout ratio of 35%, which is significantly below the global average.

Australia leads the pack in BNPL

A survey of 1000 Aussie consumers by card issuing platform Marqeta has found that almost three-quarters of Australians increased their use buy now, pay later (BNPL) during the COVID-19 pandemic, with 73% reporting that they prefer the facility over credit cards.

Moreover, almost one-third of respondents said they started using BNPL during COVID-19.

"Australians are leading the charge when it comes to adopting new credit solutions, and credit card providers should take notice," says Duncan Currie, Marqeta Country Manager for Australia and New Zealand.

"With 80% of consumers surveyed who use Buy Now, Pay Later solutions saying that they plan to continue to use them in the future, we expect financial services to continue to take notice of this shift in consumer behaviour and expect to see further innovation in the space."

Harvard says no to fossil fuel industry

Harvard's $42 billion endowment fund, America's largest, will no longer make investments in the fossil fuel industry.

"For some time now, Harvard Management Company (HMC) has been reducing its exposure to fossil fuels," says Harvard President Lawrence Bacow, "[and] does not intend to make such investments in the future."

HMC was the first endowment in the country to commit to achieving net-zero greenhouse gas emissions across the entire investment portfolio by 2050.

"Given the need to decarbonize the economy and our responsibility as fiduciaries to make long-term investment decisions that support our teaching and research mission, we do not believe such investments are prudent."

The decision to go green follows intensifying pressure from the student body and investors for the university to divest from fossil fuels.

NAB backs small business with new loan terms

Eligible businesses will now be able to apply to NAB for loans of up to 30 years for up to $2 million.

"We're determined to help Australia bounce out of the pandemic and support businesses right across the country to invest," says Ana Marinkovic, NAB executive for small business.

"Faster business loans make it easier for a busy small business owner looking for a quick decision. The loan terms offer the potential for them to make a pragmatic decision between potentially paying rent or actually buying and owning their premises."

As well as the increased terms, the loans will also have expanded loan to value ratios of up to 80% for commercial loans (between a company and the bank) and 100% for residential loans (between an individual and the bank).

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David Thornton is a journalist at Money magazine and is one of the hosts of the Friends With Money podcast. He previously worked at Your Money, covering market news as producer of Trading Day Live. Before that, he covered business and finance news at The Constant Investor. David holds a Masters of International Relations from the University of Melbourne.