Offset account failures cost Aussie borrowers millions: ASIC

ASIC says offset account failures at major banks have already cost borrowers millions in lost savings. Here's how to check if you're affected.

Australian home loan customers may be paying more interest than they should be after ASIC uncovered widespread offset account failures at major banks, with lenders already paying $55 million in compensation.

Released this morning, the Australian Securities and Investments Commission's (ASIC) review covered eight major lenders with a combined share of more than 70% of the mortgage market.

The list includes AMP, ANZ, Commonwealth Bank, Credit Union Australia (now Great Southern Bank), HSBC, ING, Macquarie and Westpac.

The review period spanned between September 2023 and August 2025, though the regulator also analysed around 204,000 home loans settled between March and August 2025.

ASIC found a number of failures by banks, including:

• Offset accounts requested by customers that weren't established at all
• Established offset accounts that weren't linked to the relevant loan
• Significant delays in linking offset accounts to loans

To date, banks have already paid out $55 million in compensation to affected customers.

But the regulator notes that the true extent of the failures is unlikely to be evident quite yet - in part, because customers have been uncovering the issues themselves.

"Some banks are not getting the basics right. Customers should not have to discover their offset account has not been working as promised," says ASIC chair, Sarah Court.

"In some cases, offset failures went undetected until ASIC started asking questions. That should concern every bank offering offset accounts."

What is an offset account and how does it work?

In essence, an offset account is a transaction account linked to a mortgage which helps reduce the loan balance on which interest is calculated.

That can then help reduce the interest a borrower will pay over time and help them pay off the loan faster.

"Australians love a good financial hack and for borrowers, offset accounts are right there at the top of the list," says Sally Tindall, data insights director at Canstar.

"For many customers, it's one of the most powerful tools borrowers have to reduce the amount of interest they pay on their mortgage, but only if it's working as intended."

Given their usefulness, it's not surprising that they've become a popular tool. According to data cited by Canstar from the Reserve Bank, 55% of mortgages have an offset account attached.

They've also jumped in popularity in recent years.

In total, ASIC notes that nearly $350 billion was being held in offset accounts as of March this year - 28% more than at the same time in 2024.

Offset account failures cost borrowers thousands in interest

In one case highlighted by ASIC in its report, a banking error led to a customer's offset account being unlinked from their loan.

The error wasn't discovered until the borrower realised that they were being charged more interest than they had been anticipating.

A complaint was then lodged with the bank, but not before the customer had forked out more than $3500 in extra interest.

In another case shared on Reddit, a user claimed that they lost out on more than $6000 after their offset account was de-linked from their mortgage during a loan restructure.

Because of the nature of offset accounts, Court says that errors can be difficult for borrowers to pick up on straight away.

"When offset accounts don't operate correctly, the harm can be hidden. Loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan.

"Customers are doubly hit - not only losing promised interest savings but also the opportunity to use that money elsewhere."

How to check if your offset account is linked correctly

Because banks haven't identified issues themselves in many cases, ASIC is encouraging borrowers to be proactive in ensuring that their offset accounts are working as intended.

ASIC says borrowers should check their mortgage offset account as soon as possible, as some customers have unknowingly paid thousands of dollars in additional interest.

To start, the regulator recommends that customers log in to their banks' mobile app or online platform to ensure that the offset account has been set up and linked to the right home loan.

If that information isn't available, then it's worth contacting the bank.

Beyond that, ASIC suggests running the numbers to see if the offset account is delivering the savings that it should be.

For anyone who isn't confident in crunching those figures themselves, Tindall suggests reaching out to a trusted third party for help.

"One option is to get a trusted advisor such as your mortgage broker or accountant to check for you.

"If the maths doesn't stack up, reach out to your bank and present them with your figures. If you formally raise a complaint, your bank must reply within 30 days."

ASIC notes that it will continue to monitor offset-related issues and the banks' response to them going forward, and that it expects lenders to support affected customers where needed.

"We expect all banks to identify and address offset account failures and ensure affected customers are appropriately compensated," says Court.

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