Millions of Australians use mortgage offset accounts to reduce interest costs on their home loans. However, a review by the Australian Securities and Investments Commission (ASIC) found that some banks have failed to deliver the promised savings, resulting in customers paying more interest than they should.

ASIC examined eight banks representing over 70% of Australia's home loan market, including AMP, ANZ, CBA, Credit Union Australia, HSBC, ING, Macquarie, and Westpac. The regulator found weaknesses in how these banks set up, monitored, and managed offset accounts.

Between September 1, 2023, and August 31, 2025, these banks collectively paid more than $55 million in compensation due to these offset-account failures. ASIC Chair Sarah Court noted that the problems can be difficult for borrowers to detect because mortgage repayments may remain unchanged, masking the additional interest costs. "When offset accounts don't operate correctly, the harm can be hidden," Ms Court said.

In some cases, the banks did not detect the failures until ASIC intervened. Offset accounts are typically linked to home loans and often come with a package fee charged by the bank. Ms Court emphasized the need for banks to invest more in their systems and increase transparency, especially given the complexity of these products and limited consumer visibility.

In a related case, the Federal Court ordered ANZ in 2022 to pay a $25 million penalty after failing to provide some customers with promised benefits related to offset transaction accounts and its former Breakfree package, including fee waivers and interest-rate discounts.

Affected customers, like a couple identified as Brooke, received compensation (over $5,000 in their case) after investigations, though determining the full extent of losses remains challenging. Brooke described the process as stressful and chose to accept the compensation to move on.

"That should concern every bank offering offset accounts," said Ms Court, highlighting the importance of addressing these systemic issues.

Sources