ASIC’s review of mortgage offset accounts has uncovered widespread failures across major banks, with customers losing interest savings on hundreds of thousands of home loans.
The Australian Securities and Investments Commission (ASIC) has found that offset accounts at eight lenders are frequently not set up, linked or monitored correctly, leading to hidden overcharging of interest and slow, patchy remediation.
The regulator noted that, as at March 2026, Australians held about $349.1 billion in mortgage offset accounts, with balances having risen 28 per cent over the previous two years.
Offset accounts are intended to reduce interest by netting deposit balances against outstanding loan amounts, but ASIC warned that when banks mishandle the feature, the damage is largely invisible to borrowers.
Across the review period covering reports between 1 September 2023 and 31 August 2025, ASIC said banks had already paid more than $55 million in compensation for offset failures.
Eight lenders under the microscope
To test whether offsets were delivering as promised, ASIC examined eight institutions: AMP Bank, Australia and New Zealand Banking Group, Commonwealth Bank of Australia, Credit Union Australia (Great Southern Bank), HSBC Bank Australia, ING Bank, Macquarie Bank, and Westpac.
The regulator said that “while some performed better than others, we identified gaps in the provision and management of offset accounts by all the banks we reviewed.”
ASIC requested loan‑level and aggregate data on home loans settled between 1 March 2025 and 31 August 2025 and reviewed 204,000 unique home loans.
The corporate regulator found that a lack of awareness, weak internal oversight and inadequate responses to issues had contributed to customers missing out on the interest savings they were promised.
Four core failures in bank systems
First, ASIC found that banks often struggled to identify when customers had asked for an offset account.
It noted that “many banks could not readily identify if, or when, customers had requested an offset account,” even though “all banks had processes to capture a customer’s request for an offset account during loan origination."
The regulator added that some institutions did not have a central document or authoritative record of this information.
Because of those gaps, ASIC noted that some banks were unable to provide basic information, with the regulator reporting that “the absence of a single record of customer offset account requests meant that some banks undertook significant manual file reviews.”
The regulator also criticised the inconsistent detection of offset failures and the reliance on complaints to reveal problems.
ASIC said, “some banks were unaware they were failing to deliver on promises to link offset accounts to home loans” and that “banks were not consistently identifying offset account failures – sometimes only becoming aware of the issue after customers complained.”
It said that “manual errors by staff were the main cause of offset account failures, accounting for 86 per cent of all failures reported by banks in their data response.”
The review further pointed to slow remediation and incomplete compensation.
“Even when banks did identify potential offset account failures, some failed to adequately assess the extent of potential customer loss and compensate customers,” the report read, adding that “one bank took nine months to introduce an offset account exception report."
ASIC also found that customers often lacked clear, real‑time visibility into whether their offset account was actually working as intended.
“Some customers had no easy way to confirm whether their offset account was set up, linked to the right loan and saving them interest, because they could not easily access key information in their bank’s mobile app,” the review noted.
Some banks did not clearly warn customers that a loan change could delink their offset account or explain what a customer needed to do to ensure the link was restored, the regulator warned.
‘Customers are doubly hit’ says ASIC
ASIC chair Sarah Court bluntly described the consequences of these failures for borrowers and the responsibilities of the banks.
“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 said.
Court added that the impact went far beyond the extra interest paid.
“Customers are doubly hit – not only losing promised interest savings but also the opportunity to use that money elsewhere,” Court said.
"Some banks are not getting the basics right. Customers should not have to discover their offset account has not been working as promised.”
Court also pointed out that some failures remained invisible until the regulator began asking detailed questions.
“In some cases, offset failures went undetected until ASIC started asking questions. That should concern every bank offering offset accounts,” she said.
Under‑reported failures and complaint signals
ASIC said it was also troubled by a disconnect between the relatively low number of offset failures recorded in data submissions and other indicators showing widespread issues.
“We are concerned that the low volume of failure reports may not accurately reflect the true extent and conflicted with other evidence we saw during the review, including a high volume of customer complaints,” the corporate regulator said.
In the failures that have been recorded, the problems skew heavily towards basic set‑up and linking errors.
ASIC reported that 55 per cent of failures involved offset accounts that were opened but not linked, 22 per cent were accounts not opened at all, and 14 per cent were accounts linked outside the timeframes communicated to customers.
It added that the top reasons for complaints were offset issues arising from manual processes, poor communication about offset accounts and failures to establish or link the offset correctly at origination.
What ASIC wants to see next
The regulator encouraged borrowers to conduct various checks, including confirming that the offset had been set up, ensuring it was linked to the correct home loan, and verifying that it was actually reducing interest.
For banks, the review made clear that offset operations are now a front‑line conduct and systems issue.
ASIC said it wanted to see stronger controls, centralised records of offset requests, routine audits of offset functionality, and clearer warnings about events that can delink an offset.
[Related: ASIC chalks up $830m in civil penalties]
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