Super-fund owned ME Bank has removed strict limits introduced last week on some mortgage redraw accounts after concern from the public.
The bank fell foul of customers after introducing new, severely reduced redraw limits on some older home loan products.
The changes, which affected about 4 per cent of customers, were intended to prevent borrowers falling behind on repayments.
But ME Bank did not adequately warn customers, leaving many unable to access money they previously had uninhibited access to.
“We are deeply sorry; we were trying to do the right thing but we went about it the wrong way,” ME Bank chief executive Jamie McPhee said.
“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.
“Our priority now is to help, support and service our customers. We recognise that we need to do better, we can and we will.”
The sudden reversal came after the bank’s owners – 26 industry superannuation funds – challenged its decision to make the change without first warning customers.
Gerard Noonan, chair of Media Super (one of the bank’s owners) warned ME Bank’s managers they owed the public an explanation soon after the new redraw limits were imposed.
“Senior management needs to get out to address public concern and explain what is happening,” he said.