Australians have unwittingly forfeited millions due to blunders in their offset accounts, revealed a review conducted by the Australian Securities and Investments Commission (ASIC).
The corporate watchdog scrutinized the offset procedures of eight key banks, collectively controlling over 70 percent of Australia’s $2.5 trillion home loan landscape.
Findings highlighted vulnerabilities in how these financial institutions set up, oversee, and manage offset accounts.
From reports received by ASIC between September 2023 and August 2025, it emerged that banks have collectively disbursed more than $55 million in compensations to customers due to offset account discrepancies.
In particular instances, customers have been reimbursed over $17,000, with system constraints or clerical mistakes being the culprits.
What exactly is an offset account?
Offset accounts operate like everyday transaction accounts, which can be used to deposit and withdraw money. But they’re often marketed as a simple way to reduce home loan interest.
That’s because money held in an offset account also reduces the outstanding amount owed on a home loan, which is used to calculate the interest paid on that loan.
If a person has $50,000 in their offset account and a $750,000 loan, they will only be charged interest on $700,000.
Sally Tindall, director of data insights at Canstar, said offset accounts are a popular choice for many Australian mortgage holders.
“For many customers, it’s one of the most powerful tools borrowers have to reduce the amount of interest they pay on their mortgage — but only if it’s working as intended.”
However, offset accounts are often associated with higher interest rates, additional account fees or a combination of both.
Check your offset account is linked
ASIC encouraged Australians to check whether their offset account was actually set up following their initial request.
Information about offset accounts should be available via a bank’s mobile app, online banking or bank statements.
Some bank sites have mortgage offset pages which outline whether a person is eligible for an offset and how to find their account number.
ASIC’s report also warned that refinancing or switching home loan products could break the link between an offset account and a person’s mortgage.
In just over a month, a customer paid more than $3,500 in additional interest because their offset account was not linked, ASIC found.
Tindall said: “When you’ve spent years building up savings in your offset, the last thing you want is for those dollars to be sitting in an account that’s not actually reducing your interest bill.”
“But don’t stop there, do some quick maths to make sure the interest you’re being charged is on the amount you actually owe, factoring in the offset balance.”
What to do if something looks wrong
Customers with complaints or questions should contact their bank directly.
According to the Australian Financial Complaints Authority (AFCA), if a person formally raises a complaint with their bank, they must respond within 21 days for complaints involving financial difficulty or 30 days for other issues.
If a person is not satisfied with their result, they can escalate the matter to AFCA, which will act as an independent mediator at no charge.
Kathy Tannous, an economics professor at Western Sydney University, told SBS News customers can take small steps to improve their financial literacy and understanding about their offset account.
She said people should “constantly review” their home loan statements and loan repayment schedules.
“I know these days it is a lot harder because there are many branches that are closed. It’s also much harder to talk to an individual because we’ve got lovely chatbots and so on.
“But I would say, be persistent, because the time that you’re spending on this may actually save you quite a bit of money.”