'We went about it the wrong way': ME Bank reverses redraw decision
ME Bank has reversed its decision to slash home loan redraw limits just days after coming under fire from customers.
The bank cut redraw balances on what it called legacy home loans written more than five years ago, but only notified customers after lowering their redraw balances, in some cases by tens of thousands of dollars.
"In response to customer feedback ME Bank has decided to change back home loan redraw limits for any customers who want it," the bank said in a statement.
ME Bank, which is owned by 26 super funds, said about 4% of customers were affected by the changes.
"The bank acknowledges that this was poorly communicated and has upset customers."
Customers who would like their redraw limits changed back can call the bank's hotline or make the request online.
"We are deeply sorry; we were trying to do the right thing but we went about it the wrong way," said chief executive Jamie McPhee.
"I would like to reassure customers that at no point did the bank 'remove funds from customer accounts' or 'transfer' any customer funds. Nor was the adjustment made for liquidity reasons."
Commenting on the issue earlier this week, Centaur Financial Services managing director and financial adviser Hugh Robertson said people see redraw facilities as savings.
"People see a redraw as a backup cash reserve. They see it as something they can use for a holiday, for their kids' educations, for renovations," said Robertson.
"Slashing redraw balances greatly disadvantages people. And these people thought they had a very vanilla, ordinary lending feature."
That said, Robertson prefers to see his clients have offset accounts, which is a separate bank account that offsets the interest you would pay on your loan.