Millions of Australians rely on mortgage offset accounts to reduce the cost of their home loan, but an ASIC review has found customers may have been unknowingly paying more interest than they should because some banks failed to properly manage offset accounts.
Reports to ASIC between 1 September 2023 and 31 August 2025 show banks paid over $55 million in customer compensation for offset account failures. Further compensation is expected as banks continue examining the extent of the problem.
ASIC reviewed the offset practices of eight banks, representing more than 70% of Australia’s $2.5 trillion home loan market. While practices varied significantly across the banks, ASIC found weaknesses in how all banks set up, monitored and managed offset accounts, resulting in some customers missing out on promised savings.
The findings are outlined in Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises (REP 837).
Almost 3.3 million Australian households have a mortgage, and Australians held about $349.1 billion in offset accounts as of March 2026, up 28% over the last two years.
ASIC Chair Sarah Court said offset accounts are marketed to customers as a simple way to save on mortgage interest over the life of a home loan, but some banks failed to deliver on that promise.
‘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.
‘Some banks are not getting the basics right. Customers should not have to discover their offset account has not been working as promised.
‘In some cases, offset failures went undetected until ASIC started asking questions. That should concern every bank offering offset accounts,’ Ms Court said.
ASIC’s review found inconsistencies in the offset account practices of some banks, highlighting four key concerns:
- Banks struggled to readily identify customer offset account requests.
- Banks’ detection of offset account failures was inconsistent.
- Banks failed to compensate customers and were slow to fix issues.
- Customers lacked visibility of information on offset accounts.
ASIC reviewed data for 204,000 unique home loans settled between 1 March 2025 and 31 August 2025. ASIC was concerned that some banks could not readily identify whether their customers had requested an offset account. Others had to manually recreate information flows. This makes it difficult to estimate the full impact to customers of the issues identified, and suggests the problem may be more prevalent than initially identified.
‘The banks continued to pay customer compensation for offset account failures reported after 1 September 2025. We expect this amount to increase as banks continue remediation,’ Ms Court said.
‘While the banks we reviewed have implemented or committed to making improvements, ASIC’s findings are relevant to all banks offering offset accounts.
‘Offset accounts are important to customers and often come at a cost. Banks need stronger controls to ensure offset accounts are set up and managed correctly, and that customers receive the savings they have been promised.
‘We expect all banks to identify and address offset account failures and ensure affected customers are appropriately compensated,’ Ms Court said.
ASIC will continue to monitor how banks address the issues identified in this review and take further regulatory action where appropriate.
Background
ASIC undertook a targeted review of eight banks and how they set up, linked and managed mortgage offset accounts from 1 September 2023 to 31 August 2025. This included how the banks found and responded to offset-related failures. The review did not assess how banks calculated interest.
ASIC reviewed loan-level and aggregate data for loans settled between 1 March and 31 August 2025. Banks were asked to identify any offset account failures for every second home loan.
The review looked at reportable situations data, customer complaints as well as information provided by the banks about their processes and controls.
While all banks were asked to provide the same data fields using the same definitions, data quality varied significantly across the banks.
Infographic: Overview of mortgage offset accounts in Australia (text version)
Overview of offset accounts in Australia
$349.1 billion in offset accounts as of March 2026. Increased by 28% over the previous two years.
Banks paid over $55 million in customer compensation for offset account failures reported to ASIC between September 2023 and August 2025.
From ASIC’s review of 8 banks
We reviewed 204,000 unique loans. The banks only identified a low volume of offset account failures.
This is despite:
- 5 banks undertaking offset related remediation programs during or after the review period.
- Banks paying compensation to hundreds of customers since the review period, with more expected.
- Banks paying compensation on a high volume of customer complaints during the review period.
Types of offset account failures identified by banks in their data response
- 55% – Offset account opened but not linked
- 22% – Offset account not opened
- 14% – Offset account linked outside of timeframes communicated to customers
- 9% – Other
Top reasons for customer complaints
- Offset issues arising from manual processes, particularly for in-life requests
- Poor communication to customers about their offset account
- Failure to establish or link an offset account at origination
Banks included in ASIC’s review
- AMP Bank Limited
- Australia and New Zealand Banking Group
- Commonwealth Bank of Australia
- Credit Union Australia Ltd
- HSBC Bank Australia Limited
- ING Bank (Australia) Limited
- Macquarie Group Ltd
- Westpac Banking Corporation
Information for customers
Given the findings of the review, ASIC encourages customers to take simple steps to check their offset account is working as expected, including checking that it:
- has been set up
- is linked to the correct home loan, and
- is receiving the benefit of saving interest.
The first place to check is the bank’s online banking website or mobile app. If the information is not available, customers should raise it with their bank. Some loan changes, like refinancing or switching loan products, may require asking the bank to re-link an offset account.
Customers can also look to ASIC’s Moneysmart mortgage offset accounts webpage for more information on offset accounts, including how offset accounts work and the benefits they provide.
