ASIC Finds Banks Paid More Than $55 Million for Offset Failures

Short summary

Eight banks reviewed by ASIC paid more than $55 million in customer compensation for mortgage offset failures reported between September 2023 and August 2025.

ASIC published the finding on 29 July 2026 after reviewing banks that represented more than 70% of Australia's $2.5 trillion home-loan market. The regulator found problems with how offset accounts were opened, linked, monitored and explained.

The review does not mean every offset account at those banks failed. It does give borrowers a practical reason to confirm that the account exists, links to the intended loan or split, and is receiving the promised interest benefit.

Use the offset account check guide for a statement-based review. A rough calculation can identify a figure worth querying, but only the lender can provide the full daily interest calculation for the account.

What ASIC found

ASIC reviewed eight banks and examined data covering 204,000 unique loans. It said weaknesses were present across the banks' offset practices, although the type and scale of issues varied.

The failures identified by banks in their data responses were grouped as follows:

These percentages describe the failures identified in the review data. They do not show the percentage of all Australian offset accounts that failed.

ASIC also said the banks' records and data quality were inconsistent. That limited the regulator's ability to estimate the full number of failures reliably.

Why an unlinked offset can be hard to notice

A mortgage repayment can stay unchanged when an offset works correctly. The benefit may instead appear as less interest charged and more of the repayment reducing principal.

That makes a linking failure less obvious than a missing payment or a rejected transaction. Online banking can show both the loan and transaction account without making the interest relationship clear.

ASIC said offset failures can remain hidden while customers pay more interest and take longer to repay the loan. The regulator identified manual processes, poor communication, and failures to establish or link accounts among the recurring problems.

A simple interest scenario

Assume a $600,000 loan, a $50,000 balance in a full offset account, and a 6.20% annual rate. If the lender recognises the full offset balance for a day, the indicative balance used for that day's interest is $550,000 rather than $600,000.

Using a simple 365-day illustration:

• Daily interest without the offset is about $101.92.
• Daily interest with the offset is about $93.42.
• The indicative difference is about $8.49 for that day.

This is a sense check, not a lender reconciliation. Daily balance timing, product rules, leap years, rate changes, partial offsets and rounding can change the amount.

Use the Offset Account Break-Even Calculator for a separate question: whether an expected average balance may outweigh an entered fee or rate premium. It cannot detect an account-linking error.

What customers can check

ASIC encouraged customers to check that the offset account:

1. has been set up;
2. is linked to the correct home loan; and
3. is providing the expected interest benefit.

Recheck after refinancing, switching products or changing loan splits. Ask the lender to confirm the linked loan number and effective date in writing if the relationship is unclear.

If the interest charged looks wrong, record the date range, loan and offset balances, rate, relevant documents and the calculation you want explained. Start with the lender's internal complaints process. The offset account check guide sets out a practical sequence and the limits of a simple calculation.

Who may be affected

The report is relevant to borrowers who expected an offset account to reduce interest, particularly after settlement, refinancing, a product switch or a loan restructure.

It does not establish that a particular bank owes a customer compensation. That depends on the account setup, contract, communications, daily balances and interest calculation. The $55 million figure relates to compensation already paid for reported failures in the review period, not an amount available to every borrower.

Calculator and site impact

No RealEstateCalc formula changed because of the ASIC report. The report concerns whether lenders delivered the offset benefit attached to their products.

The site's calculators remain indicative planning tools. They do not have access to lender systems, account links, transaction cut-offs or statement-level interest data.

What remains uncertain

ASIC said further compensation was expected as banks continued examining the problem, but it did not publish a final industry-wide customer count or total remediation estimate.

The review covered eight named banks and should not be treated as a complete test of every offset product or lender in Australia.

Related calculators and guides

• How to Check Your Offset Account Is Linked and Working
• Offset Account Break-Even Calculator
• Extra Repayments and Offset Calculator
• Loan Comparison Calculator
• How Home Loan Interest Is Calculated Daily

Sources

• ASIC: Hidden mortgage offset failures costing Australians millions, published 29 July 2026 and checked 11 August 2026.
• ASIC Report 837: Offsets, out of mind, published 29 July 2026 and checked 11 August 2026.
• ASIC Moneysmart: Mortgage offset accounts, checked 11 August 2026.

General information disclaimer

This article provides general information only. It cannot determine whether an offset account was linked correctly, whether interest was miscalculated or whether compensation is payable. Check the loan documents and statements, ask the lender for its calculation, and use the lender's complaints process where needed. This is not financial, credit or legal advice.

Last updated: 11 August 2026.