ASIC finds banks paid $55m in compensation for mortgage offset account failures
Consensus Summary
The Australian Securities and Investment Commission (ASIC) has found that eight major banks paid more than $55 million in compensation over two years to customers affected by failures in mortgage offset accounts. These failures, often caused by human error, led to customers paying more interest than intended, with ASIC identifying that 77 per cent of failures went undetected by banks before the regulator intervened. The review covered reports from September 1, 2023, to August 31, 2025, and highlighted systemic issues, including banks struggling to confirm whether customers had requested offset accounts and delays in fixing problems. Both sources agree that the failures were widespread, with ASIC warning that the harm to customers can be hidden, as repayments may remain unchanged while interest costs rise. The Guardian notes that savings in offset accounts have reached nearly $350 billion, while the ABC provides specific examples of customers receiving compensation ranging from $5,000 to over $10,000. The banking industry has acknowledged the errors, with the Australian Banking Association stating that 99% of cases were managed correctly, though ASIC emphasizes the need for better practices to prevent future issues.
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Key details reported by multiple sources:
- Australian banks paid more than $55 million in compensation to customers in just two years for failures with mortgage offset accounts
- ASIC reviewed eight banks representing more than 70 per cent of Australia's home loan market
- ASIC found that 77 per cent of reported offset-account failures were not detected by banks before ASIC requested the data
- Human error accounted for 86 per cent of the failures reported by banks
- ASIC's review covered reports made between September 1, 2023 and August 31, 2025
- ASIC found that some banks struggled to establish whether customers had requested an offset account in the first place
- ASIC found that banks failed to compensate customers or fix issues promptly in some cases
- ASIC's review identified more than 200,000 home loans with issues related to mortgage offset accounts
- ASIC found that in some cases, offset failures went undetected until ASIC started asking questions
Points of Difference
Details reported by only one source:
- Brooke, a Brisbane-based homeowner, discovered her offset account was not linked to her home loan when refinancing, leading to compensation of more than $5,000
- Brooke's mortgage broker, Cara Haines, found another customer in a similar position who was compensated more than $10,000
- One bank estimated that establishing when offsets had been requested across its customers would have required more than 20 employees working for four weeks
- ASIC found one bank had a process flaw that could delay an offset being linked by up to 21 days, but did not fully fix the process for about two years
- Brooke and her husband deposited savings into an offset account for about two years before discovering the issue
- ASIC chair Sarah Court said the problems could be particularly difficult for borrowers to detect because mortgage repayments may stay the same, masking the fact they are paying more interest than they should
- An example given: someone with a $500,000 mortgage and $50,000 in a 100 per cent offset account should generally be charged interest on $450,000
- The amount of savings Australians hold in mortgage offset accounts has ballooned to nearly $350bn in recent years
- ASIC found that in one case, a bank accidentally unlinked a customer’s offset account, leading to more than $3,500 in additional interest paid in just one month
- Simon Birmingham, CEO of the Australian Banking Association, stated that in more than 99% of cases banks were found to manage offset accounts correctly
- Meg Dalling, an assistant director at the Consumer Action Law Centre, said the failures meant it took longer to pay off a loan, calling it unacceptable in a cost-of-living crisis
Contradictions
Conflicting information between sources:
- The ABC states that ASIC reviewed eight banks representing more than 70 per cent of Australia's home loan market, while the Guardian states ASIC reviewed more than 200,000 home loans from eight banks without specifying the market share percentage
- The ABC mentions that one bank accounted for most of the 77 per cent of undetected failures, while the Guardian does not provide a breakdown of which banks had the most failures
Source Articles
Home loan borrowers missing out on millions in offset savings
The corporate regulator found Australian banks paid more than $55 million in compensation in just two years, for failures with mortgage offset accounts, warning customers could be paying more interest than they should.
Banks charged mortgage holders $55m in extra interest after offset account errors, Asic finds
Australian banks ‘not getting the basics right’, regulator says after review of more than 200,000 home loans Get our breaking news email , free app or daily news podcast Asic has accused banks of “not getting the basics right”, after the regulator found faulty mortgage offset accounts meant borrowers were being overcharged tens of millions of dollars in extra interest payments. In a new report, the Australian Securities and Investment Commission showed lenders repaid $55m to hundreds of thousand