Australia’s financial watchdog is probing allegations that bank customers are being ripped off because savings from mortgage offset accounts aren’t being properly passed on.

Of the more than 3 million Australian households that have a mortgage, more than half feature an offset account.

Used correctly, they can save borrowers thousands of dollars a year by ensuring extra savings offset the outstanding balance on a home loan, leading to less of an interest bill.

There is some $300 billion sitting in offset accounts across Australia.

However, 9News can reveal the Australian Securities and Investments Commission (ASIC) is concerned customers might not be getting those proper savings due to bank errors.

“We’ve heard, in some instances, the banks have not connected the offset account to someone’s mortgage account,” commissioner Kate O’Rourke said.

“That’s bad for the consumer, but we’re not sure how widespread that problem is.

ASIC has now launched a surveillance program of eight banks, including some of the big four, and has hinted refunds could be on the cards if it finds customers have been missing out on their deserved savings.

“Our expectation is that when things have not been properly done, consumers are remediated,” O’Rourke said.

The investigation could take a year to find out how many people have been impacted.

In the meantime, consumers have been advised to carefully check statements and ask their bank to confirm accounts are linked if they are in any doubt.