ASIC found $55M in offset account failures at eight banks, with errors potentially costing borrowers thousands. Canstar says 1.8 million mortgages may need checking.
Australia's corporate regulator uncovered $55 million in compensation paid to customers for offset account failures at eight banks over two years, pointing to widespread system errors that could cost borrowers thousands of dollars in extra interest.
The Australian Securities and Investments Commission reviewed 204,000 loans settled between March 2024 and August 2024. The review found that banks had repaid more than $55 million in compensation for offset account mistakes between September 1, 2023, and August 31, 2025. The total is likely to grow as more errors are identified.
The eight banks in the review are AMP Bank, ANZ, CBA, CUA (Great Southern Bank), HSBC, ING, Macquarie, and Westpac. All market offset accounts as a way to reduce mortgage interest, but the review found that some failed to link accounts correctly, calculated interest incorrectly, or delayed setting up accounts for months.
ASIC said the main problem was unlinked accounts. Banks opened the accounts or let customers deposit money but did not tie them to the home loan. Monthly repayments stay the same, so errors can remain hidden for years. Some customers did not see offset details in their bank's mobile app or online banking.
“When customers cannot easily check whether an offset account is linked or saving interest, they may be unable to identify problems and, therefore, unable to raise them with their bank,” the report said. “This matters even more when banks struggle to find offset account failures themselves. Without clear, accessible information, customers can overpay interest without realising.”
One example from the report involved a couple, James and Mia, who paid $3,000 in extra interest in a year after their bank failed to link an offset account with $50,000 to a $750,000 home loan. If the mistake went unnoticed for the full 30-year term, they would have paid $230,000 in extra interest and taken four more years to pay off the loan.
Other issues included accounts linked to the wrong loan, accounts opened but not linked, and delays in setting up accounts. In some cases, the bank's system showed the account was linked, but interest reductions were not applied to the balance.
Canstar, a financial comparison firm, estimated that at least 1.8 million mortgages may need to be checked to ensure the offset is linked correctly. ASIC said almost 3.3 million Australian households have a home loan, and more than half have an offset account.
Offset accounts are a large market in Australia, with $349.1 billion held in them. Customers typically pay extra for these accounts through fees or higher interest rates.
ING, one of the banks reviewed, has an Alpha Score of 75 out of 100, indicating strong fundamentals in the financial services sector. The broader stock market analysis for Australian banks will likely reflect ongoing scrutiny of retail banking practices.
ASIC said at least one bank has improved how it shows offset details on its mobile app and online banking. But the regulator noted that many banks still rely on manual processes, making it hard for customers to verify their accounts.
Customers can check by confirming the offset account was created, linked to the correct loan, and that interest calculations are accurate. The net balance – the loan amount minus the offset balance – should be used to calculate daily interest by dividing the mortgage rate by 365 and multiplying by the number of days in the period.
The report did not name which banks had the highest error rates or the largest compensation amounts. ASIC said it expects the banks to continue identifying and fixing failures.
“Without clear, accessible information, customers can overpay interest without realising,” the report said.
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