Is Your Offset Account Actually Saving You Money?

A new ASIC review found widespread offset account failures at eight banks, costing borrowers millions in hidden interest charges.

If you have a mortgage offset account, there's a real chance it's not working the way your bank promised — and you may not even know it.

A damaging new review by the Australian Securities and Investments Commission (ASIC) has found that mortgage offset accounts are frequently set up incorrectly, never properly linked to home loans, or left unmonitored across eight of Australia's largest lenders. The result? Borrowers quietly paying thousands more in interest than they should.

MPA Australia reports that banks have already paid out more than $55 million in compensation for offset failures reported between September 2023 and August 2025, and further payouts are expected as remediation continues.

The Scale of the Problem

Offset accounts have never been more popular. As of March 2026, Australians held $349.1 billion in mortgage offset accounts — a figure that has risen 28% over just two years. More than half of all home loans now carry an attached offset, making them a cornerstone of how many Australians manage their mortgage.

That scale of savings is precisely what makes ASIC's findings so troubling.

The regulator reviewed 204,000 unique home loans across eight lenders — AMP Bank, ANZ, Commonwealth Bank, Credit Union Australia (also known as Great Southern Bank), HSBC, ING, Macquarie and Westpac — collectively representing more than 70% of Australia's $2.5 trillion home loan market. ASIC found weaknesses in offset account management at every single institution it reviewed.

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

What Is Actually Going Wrong

The failures are depressingly basic. Of the problems banks themselves identified, 55% involved an offset account that was opened but never properly linked to the home loan. Another 22% were accounts that were simply never opened at all, despite the customer requesting and paying for the feature. A further 14% were linked outside the timeframes the bank had communicated to the customer.

ASIC found that manual errors by bank staff were the root cause of 86% of all failures.

Perhaps more troubling than the errors themselves is how long they went undetected. The regulator reported that some banks were unaware they were failing to deliver on promises to link offset accounts, and that some only became aware of problems after customers complained. In one case, a bank took nine months to introduce an offset account exception report.

Court was direct about what this means for borrowers: "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."

ASIC also found that some customers had no easy way to confirm whether their offset account was working, because key information wasn't accessible in their bank's mobile app. Some banks also failed to warn customers that refinancing or changing loan products could delink their offset account entirely.

What This Means for Your Loan

If you have an offset account, don't assume it is functioning correctly. The harm is designed to be invisible — your repayments stay the same even if your offset isn't reducing your interest balance. You could be months or years into your loan, quietly losing hundreds or thousands of dollars, with no obvious sign anything is wrong.

Here's what to check:

- Confirm your offset account has been opened and is linked to the correct home loan - Ask your bank for written confirmation the offset is active and reducing your daily interest - Review recent statements to see whether your interest charges reflect the offset balance you hold - If you've ever refinanced, fixed your rate, or changed loan products, check whether the event caused your offset to be delinked

ASIC has published guidance through Moneysmart for borrowers wanting to verify their account. The regulator expects all banks offering offset products — not just the eight reviewed — to audit their own systems and compensate customers who've been shortchanged. ASIC said it will consider further regulatory action where warranted.

How a Mortgage Broker Can Help

Loan Market executive chair and chief executive Sam White said the ASIC findings validated what many mortgage brokers had quietly known for years. "A number of brokers I have spoken with told me they established processes within their businesses years ago to help their customers check their offset accounts," he said. "Too often they saw customers discover months or years of savings had not been rewarded correctly, putting them thousands of dollars behind."

White was unambiguous about where the responsibility lies: "It shouldn't be up to the customer to keep tabs on whether they are receiving the product or service they signed up for. Lenders have an obligation to do what they say. Inaction is unacceptable. Knowing there is an issue but failing to improve processes is unacceptable."

White also noted that the broker channel had recently reached a record 81% share of new home lending nationally — in part, he argued, because brokers hold lenders accountable in ways borrowers dealing directly with a bank often can't.

Even if your offset turns out to be working correctly, this review is a useful prompt to take stock of your overall loan structure. If your lender's offset management can't be trusted, it may be worth exploring what's competitive in today's market. Our refinance savings calculator can show you how much a better rate or product could save over the life of your loan, and our refinancing hub can walk you through your options if you're ready to make a move.