Past probes have resulted in large fines for banking majors, but regulator worries consumers still not receiving full benefits
Australia’s financial regulator will look at one of the mortgage industry’s most popular loan features — offset accounts — amid concerns that consumers may not be receiving the full benefits they’re entitled to.
The Australian Securities and Investments Commission (ASIC) briefly mentioned the matter in its corporate plan for 2025-26. “We will conduct a surveillance on offset accounts linked to mortgages to assess whether customers are receiving benefits from these accounts,” it said.
9News reported that the surveillance program will target eight banks, including some of the Big Four, which could potentially lead to refunds if errors are uncovered.
"We've heard, in some instances, the banks have not connected the offset account to someone's mortgage account," ASIC commissioner Kate O'Rourke said. "That's bad for the consumer, but we're not sure how widespread that problem is."
Offset accounts are a popular feature among Australian borrowers — particularly owner-occupiers — offering a tax-effective way to reduce interest paid on a home loan.
By linking a transaction account to a mortgage, the account balance is offset daily against the outstanding loan principal, effectively reducing the amount of interest charged.
For example, a borrower with a $400,000 home loan and $50,000 in an offset account only pays interest on $350,000. This can significantly reduce interest costs and loan terms — provided the offset is correctly administered.
There is more than $300 billion sitting in offset accounts.
What’s prompting the review?
It is unclear why ASIC is launching the review now, although several major lenders have faced regulatory scrutiny and penalties over offset account failures in the past.
The Federal Court in 2022 ordered ANZ to pay $25 million for failing to provide certain offset account benefits it had agreed to give customers.
Commonwealth Bank and NAB have also disclosed past remediation efforts tied to offset accounts, although not all resulted in public enforcement action.
ASIC’s findings could prompt further remediation programs, penalties, or guidance around offset product disclosure.
"Our expectation is that when things have not been properly done, consumers are remediated," O'Rourke said.
The regulator will also monitor mortgage brokers’ compliance with their obligations under the credit legislation, including their obligation to act in the best interests of consumers, according to the corporate plan.
