ME Bank cut access to customers' own redraw mid-COVID — and reversed in a week

In late April 2020, at the height of the pandemic, ME Bank — owned by 26 industry superannuation funds and marketed as one of Australia's most trusted banks — unilaterally reduced the amount thousands of mortgage customers could access from their redraw facilities. Some customers lost access to tens of thousands of dollars overnight.

The sequencing made it indefensible: letters outlining the policy change were dated April 23, the account adjustment was made on April 27, and the letters were posted on April 28 — after the fact. Customers who called were left hanging for hours, only to be told someone would call back within 48 hours; few received that call. One customer had been drawing on her home loan's $80,000 redraw to pay staff in her small business until JobKeeper arrived; another couple owing just $15,000 on a $1.2 million asset saw their wedding and house-build plans frozen.

A week of negative publicity, social-media fury and the Australian Financial Complaints Authority stepping in later, the bank bowed to pressure and reversed the policy, with CEO Jamie McPhee saying the bank was 'deeply sorry'. Adele Ferguson's column called it an epic PR blunder that breached the trust on which the bank's brand was built.

The bank changed the rules during a global pandemic, when customers were most exposed to job losses and income shocks.

It adjusted accounts before the explanatory letters were even posted, so customers discovered the change from their own balances, not from the bank.

Service infrastructure didn't match the decision: hours-long holds and missed 48-hour callbacks turned confusion into betrayal.

The redrawing customers were exactly the bank's best performers — low LVRs, no default risk — so the move punished loyalty and read as arbitrary.

Process is the message: adjusting accounts before the letters explaining the change arrive tells customers their money is not theirs — and no tagline survives that.

After roughly a week of damaging coverage, ME Bank reversed the policy in full and the CEO apologised, saying the bank was 'deeply sorry' to affected customers. The Australian Financial Complaints Authority said it would look into the matter. The episode became a widely cited case study in the reputational cost of treating customers poorly.