REP 837 Offsets, out of mind: Banks fall short on mortgage offset account promises

ASIC has found that mortgage offset accounts are not reliably delivering the interest savings promised to customers, in findings released on 29 July 2026 in Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises. The review covered eight banks representing more than 70 per cent of the Australian home loan market and examined around 204,000 individual loans. ASIC found weaknesses across all eight banks in how offset accounts were set up, monitored and managed, with some banks struggling to readily identify customer offset account requests, inconsistent detection of offset account failures, slow or absent compensation once failures were identified, and limited visibility for customers of how their offset account was performing.

Offset accounts are a significant feature of Australian home lending, with balances reaching approximately 349.1 billion dollars as at March 2026, an increase of 28 per cent over the previous two years. When an offset account is linked and functioning correctly it reduces the interest charged on a home loan by the balance held in the linked account, and ASIC illustrated the potential effect of a failure with a hypothetical couple who, after a bank failed to link their account as requested, could miss out on close to 230,000 dollars in interest savings and spend an extra four years repaying their loan if the fault went uncorrected. Reports to ASIC between September 2023 and August 2025 show banks have already paid more than 55 million dollars in compensation for offset account failures, with further compensation anticipated as banks continue to examine the extent of the problem.

ASIC Chair Sarah Court said the harm from offset failures can remain hidden because loan repayments stay the same while customers unknowingly pay more interest, and that banks are expected to ensure offset products operate as marketed. The report does not announce new rules but sets clear supervisory expectations that banks identify, remediate and compensate for offset failures without waiting for customer complaints or ASIC intervention.