National Australia Bank Limited has refunded $1.7 million to 966 home loan customers after it failed to properly set up mortgage offset accounts.
The Australian Securities and Investments Commission (ASIC) revealed that the bank had received customer complaints regarding their mortgage offset accounts.
After NAB conducted an internal review, it found that between April 2010 and August 2017, it had not linked some offset accounts to broker-originated loans.
The issue only applied to broker-originated loans.
The error resulted in some broker customers with mortgage offset accounts overpaying interest on their home loan.
NAB general manager for home lending, Meg Bonighton, commented: “In February 2017, NAB commenced a review into how it processes offset account requests for customers who apply for a home loan through a broker, looking back to 2010.
“This review found that some customers may not have had their offset account correctly linked to their home loan, and that these customers may have consequently paid additional interest.
“We sincerely apologise to our customers for this, which was due to administration errors.
“All of the customers identified through this review with an open account have been contacted and received refunds. They represent 0.73 per cent of the total number of offset accounts established through our broker channel since 2010.”
Ms Bonighton added that NAB had advised ASIC about the matter earlier this year and, over the past 12 months, has “implemented a number of measures to improve offset origination processes and enhanced the ability for customers to review their offset arrangements themselves”.
NAB has now refunded affected customers so that they are only charged interest that would have been payable had the mortgage offset account been properly linked from the commencement of the home loan.
The bank will also remediate customers who had an offset account during the relevant period but had repaid their home loan before 2017.
Speaking of the news, acting ASIC chair Peter Kell said: “Consumers should be confident that when they sign up for a home loan, they are receiving all of the benefits that are being promoted.
“Where there are errors, there should be timely and appropriate action to ensure that consumers are not any worse off as a result of the mistake.”
Customers that have any questions about their accounts should contact NAB on 1800 152 015.
[Related: Major bank to refund $65m to customers]