ASIC Finds Banks Failing Offset Accounts, Costing Australians A$55M

Australia’s banking regulator ASIC found that all eight major banks reviewed have failed to properly set up and manage mortgage offset accounts, costing customers millions in lost savings. Between September 2023 and August 2025, banks paid over A$55 million in compensation for offset account failures. The problem affects an estimated 1.8 million Australian households, with the true scale of customer losses still unknown.

What ASIC discovered in its bank review

ASIC examined eight banks representing more than 70 per cent of Australia’s A$2.5 trillion home loan market: AMP, ANZ, CBA, Credit Union Australia, HSBC, ING, Macquarie, and Westpac. The regulator found weaknesses in how all of them set up, monitored, and managed offset accounts. Some banks struggled to identify customer requests, were inconsistent in detecting failures, and failed to compensate customers quickly. In some cases, banks only discovered the problems after ASIC asked questions.

How offset account failures harm borrowers

An offset account is a savings account linked to a mortgage. Money in the account reduces the interest the bank charges on the loan balance. If you owe A$500,000 but hold A$50,000 in a 100 per cent offset account, you should only pay interest on A$450,000. When banks fail to link the account properly, customers unknowingly pay more interest while their repayments stay the same, masking the problem. ASIC chair Sarah Court said this hidden harm is particularly difficult for borrowers to detect. In one example, a couple with a A$750,000 mortgage and A$50,000 in their offset account paid an extra A$3,000 in interest over one year due to a failed link. Over the life of the loan, they could have missed out on almost A$230,000 in savings.

Scale of the problem and what customers should do

As of March 2026, Australians held approximately A$349.1 billion in offset account balances, up 28 per cent over two years. Reserve Bank data show 55 per cent of Australian mortgages, representing an estimated 1.8 million households, have an offset account. ASIC is urging customers to contact their bank and verify their offset account is properly linked and working correctly. The regulator said further compensation is expected as banks continue examining the extent of the problem.

Banks defend their systems

The Australian Bankers’ Association CEO Simon Birmingham said the ASIC report shows that in well over 99 per cent of cases, offset accounts work as intended. He attributed failures to manual system processes in isolated cases or communication breakdowns. Banks are investing in new technology platforms to improve accuracy, Birmingham said, though many still operate legacy systems. However, ASIC noted that banks themselves do not know the true scale of how many customers may be affected by offset failures.

Final Thoughts

With 1.8 million Australian households relying on offset accounts and A$55 million already paid in compensation, the ASIC findings signal systemic failures across the banking sector. Customers should verify their offset accounts are properly linked to avoid years of hidden interest costs.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.