ASIC reveals ‘unsettling’ mortgage offset review

A review by the Australian Securities and Investments Commission (ASIC) has found that customers of some of the country's largest banks representing more than 70% of Australia's $2.5 trillion home loan market have been shortchanged by widespread failures in how offset accounts are set up, linked and monitored.

The regulator's report, Offsets, out of mind: Banks fall short on mortgage offset account promises, found that banks paid out more than $55 million in customer compensation for offset failures reported between September 2023 and August 2025, with further payouts expected as remediation continues.

The findings have drawn a sharp response from the broking community, with Loan Market executive chair and chief executive Sam White calling on lenders to explain their actions.

What ASIC found

Almost 3.3 million Australian households hold a mortgage, and Australians had $349.1 billion sitting in offset accounts as of March 2026 – up 28% over two years. Yet the regulator's review of AMP Bank, ANZ, Commonwealth Bank, Credit Union Australia, HSBC, ING, Macquarie and Westpac found weaknesses spanning four key areas (although the regulator did not single out any specific lenders named in the review):

• Banks struggling to identify customer offset requests

• Inconsistent detection of failures

• Slow or absent compensation, and

• Poor customer visibility of their own account information

Of the failure types banks did identify across 204,000 loans reviewed, 55% involved an offset account that was opened but never linked to the home loan, while 22% were never opened at all.

Image credit: ASIC

ASIC Chair Sarah Court said the harm from these failures is often invisible to the customer.

"When offset accounts don’t operate correctly, the harm can be hidden," said Court. "Loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan. Customers are doubly hit – not only losing promised interest savings but also the opportunity to use that money elsewhere.

"Some banks are not getting the basics right. Customers should not have to discover their offset account has not been working as promised."

'Preventable mistakes' cost customers millions

Responding to the findings, White said the scale of the problem – and the fact several banks were aware of it for years without acting – was the most troubling element of the report.

"Unsettling report out today from ASIC that showed just how widespread the issue of lenders failing their customers is," White said. "With weaknesses found across all eight lenders the regulator investigated – representing 70% of home loans – the banks have some explaining to do."

White (pictured, right) continued: "Obviously the failure of the banks to set up offset accounts correctly for customers is a major issue. To me, the biggest piece in this is the fact many of them knew there were issues – which had existed for years – but failed to do anything about it.

“These preventable mistakes and delays have cost customers over $55 million in the last two years alone. And these are just the known cases – how many more are unaware they have been shortchanged by their bank?"

White argued the onus should never have fallen on borrowers in the first place. "It shouldn't be up to the customer to keep tabs on whether they are receiving the product or service they signed up for. Lenders have an obligation to do what they say. Inaction is unacceptable. Knowing there is an issue but failing to improve processes is unacceptable."

Brokers filling the gap

White said Loan Market brokers had for years been running their own checks to catch the kind of failures ASIC has now confirmed at scale.

"A number of brokers I have spoken with told me they established processes within their businesses years ago to help their customers check their offset accounts,” said White. “Too often they saw customers discover months or years of savings had not been rewarded correctly, putting them thousands of dollars behind."

He tied the finding back to the growing dominance of the broker channel, which recently reached a record 81% share of new home lending nationally: "I look forward to the day the banks and lenders are accountable to putting their customers first, like mortgage brokers are. Maybe that is why 81% of home loans are written through a mortgage broker."

What happens next

ASIC said it will continue monitoring how the eight banks address the issues raised and will consider further regulatory action where warranted, a stance consistent with ASIC's broader scrutiny of lending practices flagged to the industry earlier this year.

Court said the regulator expects all banks offering offset products – not only the eight reviewed – to check their own systems and compensate affected customers appropriately.

For borrowers wanting to check their own position, ASIC's Moneysmart has published guidance on confirming an offset account has been correctly set up and linked.

MPA has reached out to AMP Bank, ING and Macquarie for statements.

An AMP Bank spokesperson told MPA: "Offset accounts are an important feature of our banking system and we engaged constructively with ASIC throughout the review process. We have processes in place to manage and oversee our offset accounts, and will continue to strengthen controls and monitoring as needed."