ASIC found widespread weaknesses in how eight banks set up and managed mortgage offset accounts, leading to higher interest for borrowers and more than $55 million in compensation paid over two years, with the figure expected to rise.

The review analyzed over 200,000 home loans and uncovered systemic issues, including mislinking offsets and poor monitoring; one borrower was overcharged by more than $3,500 in a single month due to an offset error.

Between September 2023 and August 2025, banks reimbursed more than $55 million to hundreds of thousands of borrowers due to offset-account failures.

If issues persist after contacting lenders, borrowers should pursue formal mediation through AFCA, which can resolve disputes free of charge.

Regulatory scrutiny continues post-Hayne, signaling ongoing reforms and oversight of Australian banking practices.

Common failures include manual offset setup, difficulty verifying offset requests, and inadequate problem detection, with 77% of failures not identified before ASIC data requests.

Consumer groups say borrowers rely on offsets for interest savings and deserve transparent, reliable service, especially during a cost-of-living crisis.

Treasurer and ASIC chair stressed consumer protection and the need for stronger controls and accountability in offset-account management.

Some banks could not determine whether customers actually requested an offset, suggesting the problem could be broader than initially estimated.

ASIC’s four major findings: uncertainty over offset requests, poor problem detection and delayed responses, flawed linkage processes, and poor communication about offset status and de-linking risks.

ASIC will give banks individual feedback, monitor remediation, and consider further regulatory action; officials say Australians should not pay more interest than promised.

The findings come seven years after the Hayne royal commission, indicating persistent issues in the banking sector.