Your Offset Account May Not Be Working — Here's How to Check
ASIC found banks covering more than 70% of the home loan market failed to properly set up or link offset accounts. Here's what borrowers need to do now.
What ASIC Found — and Why It Matters
If you hold a mortgage with an offset account, there is a meaningful chance it has not been set up correctly — and you may be paying extra interest without realising it.
MPA Australia reports that a formal Senate inquiry into bank offset account practices was referred to the Economics References Committee on 15 September 2026, following a damning review by the Australian Securities and Investments Commission (ASIC). The regulator's report — Report 837, *Offsets, out of mind: Banks fall short on mortgage offset account promises* — examined loan-level data for 204,000 home loans settled between March and August 2025.
ASIC found that banks representing more than 70 per cent of the country's home loan market had failed to properly set up, link, or monitor offset accounts for customers. Those banks have collectively paid out more than $55 million in compensation for offset failures reported between September 2023 and August 2025 — a figure ASIC expects to keep rising as remediation continues.
ASIC Chair Sarah Court described the harm as "often invisible" to customers: "loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan." In several cases, Court noted, failures went undetected until the regulator itself started asking questions.
The scale is significant. There are 3.3 million Australian households with a mortgage, and as of March 2026, Australians held $349.1 billion in offset accounts — a figure that has grown 28 per cent in just two years.
What Actually Goes Wrong — and the Cost to Borrowers
Two failure types dominated the ASIC findings. In 55 per cent of cases, the offset account had been opened but never linked to the home loan — meaning funds sitting in the account were not reducing the balance on which the borrower was being charged interest. A further 22 per cent of failures involved accounts that were never opened at all, despite being requested by the customer.
Both failure types produce the same outcome: interest charges accumulating quietly in the background that should not have been charged. The longer the failure goes undetected, the higher the cost.
Senator Andrew Bragg, who has championed the inquiry, put it plainly: "Australians should not be left paying more interest because an offset account was not properly established, linked or managed." The inquiry is due to report by 7 June 2027 and will examine how accounts are established and monitored through to whether compensation frameworks for affected customers are adequate.
Jarden Research analyst Matthew Wilson, writing in MPA Australia, estimates that offset balances system-wide represent roughly 12 per cent of Australian home loans — about $308 billion as of August 2025. The cost to the big four banks of providing offset accounts runs to an estimated $6.76 billion annually in lost spread income, approximately 7 per cent of their home loan revenue. CBA carries the largest impact at $2.4 billion, followed by ANZ at $1.6 billion, Westpac at $1.52 billion, and NAB at $1.24 billion. Given those stakes, the banking sector faces real pressure in the years ahead to restructure how offset accounts are priced and managed.
Is an Offset Account Worth the Fee?
The Senate inquiry is also examining whether offset account fees represent fair value for customers. ASIC's own report noted that "many borrowers pay for offset features through higher interest rates, account fees, or both" — without always being able to confirm they were receiving the benefit they were paying for.
Annual offset fees typically range from $295 to $395. MPA Australia reports that on a $600,000 mortgage with a $400 annual fee, a borrower needs roughly $6,500 sitting in the offset to break even — only balances consistently above that threshold deliver a genuine interest saving. Borrowers holding less than around $5,000 in their offset may find the fee outweighs what they actually save.
Demand for offset-linked products has grown, with take-up estimated up around 30 per cent over the past couple of years, driven in part by rising interest rates making the offset benefit more visible. But heavy marketing of offset accounts creates a perception that they suit everyone — they do not.
For borrowers with modest cash balances, a basic variable loan with a redraw facility — typically carrying no annual fee — may work out cheaper. Use our repayment calculator to compare the interest impact of an offset structure against a basic variable option for your specific balance.
If you already hold an offset account, the most important action right now is to ask your lender to confirm in writing that it is correctly linked to your mortgage. If you are also due for a home loan review, it is worth checking whether your current loan structure is genuinely working in your favour. Visit our refinance hub to compare what is available across the market.