- Banks have paid $55 million in compensation to home loan borrowers for offset account failures
- Corporate regulator ASIC has identified failures and weaknesses in offset account systems in eight major banks
- The most common failure was that offset accounts were not linked to customers' home loan accounts
Millions of Australians use offset accounts to reduce overall interest on their home loans and generally pay a higher interest rate for the option.
But corporate regulator ASIC has uncovered failures and weaknesses in bank systems that have seen borrowers missing out on millions of dollars in promised savings.
To compound the issue, the problems are largely hidden as loan repayments stay the same with borrowers relying on banks to do the right thing and make accurate interest calculations.
ASIC found the most common type of offset failure, accounting for 55%, was the offset account was opened but not linked to the home loan.
The next greatest failure (22%) was the offset account was never opened for the customer while another issue was put down to slow responses to offset account requests that saw borrowers lose out on interest savings in the meantime.
Banks 'not getting basics right'
In some cases, the failures only came to light after ASIC began reviewing mortgage offset accounts at eight banks.
ASIC chair Sarah Court said customers are always the losers when offset accounts don't operate correctly.
"Customers are doubly hit - not only losing promised interest savings but also the opportunity to use that money elsewhere," she said.
"Some banks are not getting the basics right. Customers should not have to discover their offset account has not been working as promised."
What are the issues with offset accounts?
ASIC outlined four key concerns with offset account practices:
- Banks struggled to readily identify customer offset account requests
- Banks' detection of offset account failures was inconsistent
- Banks failed to compensate customers and were slow to fix issues
- Customers lacked visibility of information on offset accounts
ASIC reviewed more than 204,000 unique home loans written between March and August 2025, finding all banks had weaknesses in their offset account systems.
Their review raised concerns some banks couldn't readily identify whether customers had requested an offset account.
Some had to manually create review processes, making it even more difficult for ASIC to estimate the full impact of the issues it identified.
Offset accounts gain in popularity
Around 55% of home loans now have an offset facility, according to Reserve Bank of Australia data.
The amount of funds kept in offset accounts has climbed 28% over the past two years as borrowers looked to offset the amount of interest they pay in a high interest rate environment.
Collectively, almost $350 billion sat in offset accounts as at March 2026.
Offset accounts are transaction accounts linked to a mortgage where the balance in the offset effectively lowers the home loan amount used in interest calculations.
While home loan repayments remain the same, it sees a greater proportion of the repayment go towards reducing the loan amount, effectively cutting the interest payable over the life of the loan.
Offset accounts do not earn interest but are set up to save on home loan interest, meaning unlinked accounts would see borrowers lose out on both fronts.
To compound the financial loss, borrowers typically pay a higher home loan interest rate for an offset account from the outset.
What can I do to check my offset account is working?
ASIC is encouraging customers to take simple steps to check their offset accounts are operating correctly.
It recommends checking whether an offset account:
- has been set up
- is linked to the correct home loan
- is receiving the benefit of saving interest.
ASIC also warns any changes to the loan, such as refinancing or switching to a different loan product within the same bank - may also automatically de-link an offset account.
So far, five banks are undertaking offset remediation programs, already paying compensation to hundreds of customers.
ASIC said it expects more customers to receive payments.
The banks involved in the review were:
- AMP Bank
- ANZ
- Commonwealth Bank
- Credit Union Australia (now Great Southern Bank)
- HSBC
- ING Australia
- Macquarie Bank
- Westpac
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Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 5.95% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
