You set up your offset account expecting it to reduce the interest charged on your home loan. But what if it’s not linked correctly, or isn’t operating as intended? A recent ASIC review suggests this has happened to a significant number of Australian borrowers.
ASIC has released a report examining how major lenders manage mortgage offset accounts. The review covered eight banks representing more than 70 per cent of Australia's home loan market.
The findings were unsettling. While practices varied across the banks, ASIC identified weaknesses at each lender in how offset accounts were opened, linked, monitored and managed. In some cases, customers missed out on the interest savings they were entitled to receive.
Banks paid over $55 million in customer compensation for offset account failures reported to ASIC between September 2023 and August 2025, and that figure is expected to grow as remediation continues.
Offset accounts are marketed as an easy way to reduce interest across the life of a loan, yet the review found this promise is not always delivered. 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.
With mortgage offset accounts now a common feature of Australian home lending, the stakes are meaningful.
The types of errors ASIC identified are surprisingly basic. Among the failure types identified by the banks across the 204,000 loans in scope, 55% involved an offset account that had been opened but not linked to the home loan, while 22% involved an account that had not been opened.
Other issues stemmed from system errors, process gaps and poor record keeping. In some cases, banks could not even confirm whether a customer had originally asked for an offset account, which suggests problems may be more widespread than the reported numbers show.
Given ASIC's findings, borrowers may wish to check that their offset arrangement is operating as intended. A good starting point is:
log in to your online banking or mobile app and confirm the offset is linked to your home loan;
check whether the balance is being applied to the correct loan and at the applicable offset percentage provided under your loan terms;
review recent loan statements for anything that looks inconsistent; and
if you’ve refinanced or switched loan products, ask your bank whether the offset needs to be re-linked.
If the information is not available, raise it with your bank.