ME Bank and Industry Super Australia will face a federal parliamentary committee on Thursday to ensure they are providing their customers the support they need during the coronavirus pandemic.
On Friday, ME Bank reversed a policy that reduced the amount of money its home loan customers could access from their redraw facilities following a major public backlash.
Liberal MP Tim Wilson, who chairs the House of Representatives economics committee, said the bank’s conduct has “raised urgent questions about the security and flexibility of the savings of Australians with their mortgage products and necessitates scrutiny”.
At the same time, he accused Industry Super Australia (ISA) of publishing “dubious calculations” about the impacts of early withdrawals from superannuation accounts in response to the economic impact from the pandemic.
Early modelling from ISA suggested a 30-year-old member withdrawing the full $20,000 under the government’s provision would retire on roughly $100,000 less than they otherwise would have, while the Grattan Institute estimated the same person would lose $58,000.
Following a subsequent disagreement with Treasury over the assumptions underpinning its modelling, ISA said it would revisit its calculations.
“Australians trust superannuation funds with significant savings. They hold a fair expectation that funds will provide accurate information and will act promptly if they are eligible for early withdrawal,” Mr Wilson said.
The Liberal MP also sent a ‘please explain’ to ME Bank following its decision to limit customer redraws on certain home loans.
Among other questions, he asked the bank: “Is ME Bank providing loans to industry funds to address the liquidity issues and as a consequence they need to make money from people’s offset accounts to maintain its prudential risk profile?”
Super funds have repeatedly denied claims the early super access scheme will cause them liquidity problems.
And ME Bank was also quick to dismiss Mr Wilson’s theory, with CEO Jamie McPhee explaining in an open letter that it made changes to redraw facilities to ensure customers did not fall into financial hardship, and that “rumours about other motives are simply untrue”.
Following revelations that up to 150 Australians were victims of attempts to defraud the Coalition’s early super access scheme, the inquiry will also interrogate ISA’s processes to stop fraud.
The hearing by videoconference on Thursday will form part of the committee’s ongoing review of the four major banks and other financial institutions.
The New Daily is owned by Industry Super Holdings