The regulator has singled out mortgage offset accounts as a focus area for assessment.
The Australian Securities and Investments Commission (ASIC) has revealed it will conduct surveillance on offset accounts linked to mortgages to assess “whether customers are receiving benefits” from the accounts.
In its corporate plan for 2025–26, the financial regulator also confirmed it was monitoring mortgage brokers’ compliance with their obligations under the credit legislation, including best interests obligations.
No further details were provided regarding the scope of the probe or the reasons for stronger oversight.
What’s driving the ASIC probe?
Offset accounts linked to mortgages have been growing in popularity, boosted by expanding options for borrowers as banks offer more offset features.
The Commonwealth Bank of Australia (CBA), AFG Home Loans, National Australia Bank (NAB), and Westpac have all rolled out offset accounts or features this year as borrowers look to reduce mortgage interest costs, while maintaining easy access to their funds.
Australian borrowers had a record $271.7 billion in offset accounts as of March 2024, according to the Australian Prudential Regulation Authority (APRA). The figure has been increasing consistently, with a greater number of mortgages also linked to one.
As well as growing popularity, the intensifying scrutiny of the space is also likely due to several high-profile regulatory incidents in recent years.
In 2022, Australia and New Zealand Banking Group (ANZ) was fined $25 million for failing to provide several agreed-upon benefits to certain customers, including offset account customers.
That came after Bankwest was forced to refund about 10,800 customers more than $4.9 million in 2017 after not properly linking offset accounts to mortgages.
NAB also refunded $1.7 million to 966 home loan customers in 2017 after it failed to properly set up mortgage offset accounts.
Last week, ASIC outlined its focus for financial ecosystem threats in the coming year and detailed an increase in its investigation and enforcement activity.
ASIC chair Joe Longo said the agency’s new commissioners, new CEO, and refreshed executive team had helped deliver a 50 per cent boost in investigation numbers over the past year and a nearly 20 per cent increase in new civil enforcement proceedings.
“The operating environment for our financial ecosystem is increasingly complicated and that requires a well-calibrated response from ASIC which we have detailed with our corporate plan,” Longo commented.
“We direct our efforts and finite resources to areas where we see the greatest risks and potential harms. “In some cases, that means continuing work already underway, such as our efforts to combat high-risk super switching. In other cases, this means pivoting to new or emerging issues or causes for concern."
He added the corporate plan highlights more than a dozen new regulatory initiatives from reviews of offset accounts and debt collection, to whistleblower protections and SMSF establishment advice.
"This plan demonstrates our commitment to being a modern, confident and ambitious regulato," he said.
