Your Offset Account May Not Be Working — Here's What to Do

ASIC found banks paid over $55 million in offset account compensation — here's how to check yours is actually working.

If you have a mortgage offset account, there is a reasonable chance it has not been working as your bank promised — and you may have no way of knowing. That is the central finding of a new review by the Australian Securities and Investments Commission (ASIC), which found eight banks collectively paid more than $55 million in compensation over two years for offset account failures that left customers silently paying more interest than they should have.

As a mortgage broker, this is the kind of finding that makes you want to call every client you have ever placed into an offset package. Because the problem is not just that banks make mistakes — it is that the mistakes are hidden in plain sight.

What ASIC's Review Found

ASIC examined eight major lenders — AMP, ANZ, CBA, Credit Union Australia, HSBC, ING, Macquarie and Westpac — which together represent more than 70 per cent of Australia's home loan market. Between 1 September 2023 and 31 August 2025, those banks paid more than $55 million in compensation after failing to properly set up, link or maintain customer offset accounts.

ABC News reports the review identified four core weaknesses:

**Banks couldn't confirm offset accounts had even been set up.** Seven of the eight lenders relied on manual processing for at least some offset-account requests, particularly when borrowers refinanced or changed their loan structure. At one bank, the key form used to record customers' offset requests was not digitised. The bank estimated that tracing back who had actually requested offsets would require more than 20 employees working for four full weeks.

**Banks failed to detect problems when they occurred.** Lenders had not identified 77 per cent of offset failures themselves before ASIC requested the data. Human error accounted for 86 per cent of reported failures. In one striking example, a bank discovered in September 2025 that an internal report designed to flag potential offset-linking failures had not been reviewed for nearly five years.

**Problems went unfixed for too long.** One bank identified a process flaw that could delay an offset being linked to a home loan by up to 21 days — and then did not fully resolve the issue for approximately two years.

**Customers were not warned when their offset was at risk.** When borrowers fixed part of their loan, split their loan or refinanced, banks routinely failed to explain that those changes could de-link the offset account. Many customers simply did not know they needed to request a new link — and complaint records showed this was a widespread cause of failure.

ASIC chair Sarah Court summed up why these failures are so difficult to detect: "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." She also confirmed that in some cases the failures went undetected by the banks themselves until ASIC started asking questions.

The Hidden Harm — and Your Next Steps

The reason offset account failures are so hard to catch is the same reason they go undetected: your monthly repayments do not change. The bank keeps debiting the same amount, so nothing looks wrong from the outside. The extra interest builds quietly in the loan balance, extending your mortgage term and eroding the savings advantage you were paying for.

ABC News reported on a Brisbane homeowner — identified only as Brooke — who discovered after approximately two years that her offset was initially linked to the wrong split of her loan, and then fell off entirely when part of the loan was fixed, with no notification from the bank. After investigation, the bank offered more than $5,000 in compensation. Her broker's subsequent review of another client at the same institution uncovered a separate failure that led to more than $10,000 in compensation.

These are not edge cases. Reserve Bank data as at March 2026 shows 55 per cent of all housing loan facilities in Australia include an offset account. With millions of borrowers relying on offsets to reduce their interest costs, even a modest error rate translates into substantial harm.

This problem also has a history. In 2017, Bankwest refunded more than $4.9 million to approximately 10,800 customers after failing to properly link offset accounts. That same year, NAB refunded $1.7 million to 966 home loan customers for the same issue. In 2022, the Federal Court ordered ANZ to pay a $25 million penalty after failing to deliver promised benefits tied to its offset package.

**Check the link today.** Log into your internet banking or app, open your offset account and confirm it explicitly shows as linked to your home loan — not simply sitting in the same profile while technically unlinked.

**Review your loan history after any changes.** If you have ever fixed part of your loan, refinanced, changed your repayment structure or split your mortgage, check whether the offset remained linked through that process. These are the most common trigger points for de-linking.

**Run a quick sanity check on the numbers.** If your offset holds $80,000 against a $450,000 loan, your lender should be calculating interest on $370,000. You can cross-reference the interest figure on your statements against what you expect — or use our repayment calculator to model what your correct interest cost should be.

**If something doesn't add up, ask your lender.** Under ASIC's scrutiny, banks are obligated to investigate failures and compensate customers where errors occurred. ASIC has confirmed it will monitor remediation progress and consider further regulatory action where appropriate.

**Consider whether your package fee still makes sense.** Most offset accounts come with an annual fee and sometimes a slightly higher interest rate. If you are not maintaining a meaningful balance, comparing your current rate against the cheapest available loans might deliver better value than paying for a feature that may not be performing as intended.

For the full details of ASIC's review, see the original report at ABC News.