Why is ASIC concerned about mortgage offset accounts?

ASIC is concerned because some mortgage offset accounts were not properly linked to home loans, causing customers to pay more interest and miss out on expected savings. The regulator’s review showed this issue affected loans across eight banks that together cover more than 70% of Australia’s home loan market.

What are the main findings of ASIC’s mortgage offset review?

ASIC found banks struggled to identify offset account requests, detected failures inconsistently, were slow to fix issues, and did not always compensate customers or provide clear information on offsets. The review also highlighted data quality problems and suggested offset failures may be more widespread than initial figures indicate.

How are customers financially affected according to ASIC?

ASIC reported that between 1 September 2023 and 31 August 2025 banks paid over A$55 million in compensation for offset failures, and expects the amount to rise as remediation continues. A hypothetical case showed a couple with a A$750,000 loan and A$50,000 in an offset could lose more than A$3,000 in one year and almost A$230,000 over the loan life if the account is not linked properly.

How is ASIC responding to these mortgage offset failures?

ASIC said it will keep monitoring how banks address offset issues, expects all institutions to identify failures and compensate affected customers, and may take further regulatory action where appropriate. It also published Report 837 outlining the findings and called on banks to strengthen controls around setting up, linking and managing offset accounts.

What does ASIC recommend customers do about their mortgage offset accounts?

ASIC encourages customers to check that their mortgage offset account has been set up, is correctly linked to the intended home loan and is delivering interest savings as shown in online banking or statements. It also advises borrowers to contact their bank if information is missing or unclear, especially after refinancing or switching loan products, and to review guidance on ASIC’s Moneysmart offset accounts page.

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ASIC warns offset account errors leave homeowners paying extra interest

Written by Jon CuthbertPublished Jul 29, 2026, 1:04 AM

ASIC found some mortgage offset accounts were not properly linked, leaving customers paying more interest than necessary.
Banks have already paid more than $55 million in compensation for offset failures and may need to pay more as remediation continues.
ASIC wants banks to strengthen controls on offset accounts and is urging borrowers to check their accounts are correctly set up and delivering promised interest savings.

ASIC’s review of eight banks found that some mortgage offset accounts were not linked correctly to home loans, meaning affected borrowers paid higher interest and missed out on expected savings.

The review covered lenders representing more than 70% of Australia’s A$2.5 trillion home loan market and examined data on 204,000 loans settled between 1 March and 31 August 2025, highlighting system weaknesses and manual processes around offsets.

“When offset accounts don’t operate correctly, the harm can be hidden,” said ASIC Chair Sarah Court, noting that repayments stay the same while customers unknowingly pay more interest and take longer to clear their loans.

ASIC reported that banks have paid over A$55 million in customer compensation for offset account failures since September 2023 and said further remediation is expected as institutions continue reviewing their books.

ASIC stated that offset accounts are widely used, with Australians holding about A$349.1 billion in offset balances as at March 2026, and it expects all banks to identify account failures, compensate affected customers and improve monitoring controls.

The regulator reviewed how banks set up, linked and managed offset accounts, including how common events such as refinancing or product switches can break the link between an offset and a home loan, and it found some banks struggled to readily identify whether customers had requested an offset.

ASIC’s findings sit alongside consumer guidance urging borrowers to confirm offsets are properly linked via apps or statements, check that interest savings match expectations, and contact their bank if account information is unclear or appears inconsistent after changes to their mortgage.