If you have a mortgage offset account, there's a real chance it isn't doing what you think it's doing. On 29 July 2026, ASIC published Report 837, a review of how eight major banks set up and manage offset accounts. The findings aren't reassuring. Banks have already paid out more than $55 million in compensation to customers whose offset accounts weren't working properly, and ASIC expects that figure to keep rising.
What ASIC found
ASIC reviewed the offset practices of AMP Bank, ANZ, CommBank, Credit Union Australia, HSBC, ING, Macquarie and Westpac, together representing over 70% of Australia's $2.5 trillion home loan market. Almost 3.3 million Australian households have a mortgage, and Australians now hold about $349.1 billion in offset accounts, up 28% over the past two years.
Across the banks reviewed, ASIC identified four recurring problems:
- Banks struggled to readily confirm whether a customer had actually requested an offset account, sometimes needing manual searches to check.
- Detection of offset failures was inconsistent, meaning problems often went unnoticed for long periods.
- Some banks were slow to compensate customers once failures were identified.
- Customers had no easy way to check whether their offset account was set up correctly, linked to the right loan, or actually reducing their interest.
Of the failures banks did identify, 55% were offset accounts that had been opened but never linked to the home loan, 22% were accounts that were never opened at all despite being requested, and 14% were linked outside the timeframe the customer was told to expect.
ASIC Chair Sarah Court put it plainly: "When offset accounts don't operate correctly, the harm can be hidden. Loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan." Because your repayment amount doesn't change when an offset fails, there's no obvious signal that anything is wrong. You just quietly pay more interest, month after month.
Why this matters even if your offset seems fine
The most unsettling part of ASIC's review is that in some cases, offset failures went undetected until ASIC itself started asking questions. That means the banks' own monitoring didn't catch the problem, customers didn't catch it, and it only surfaced under regulatory pressure. If a fault like this can sit unnoticed for months or years, "my statements look normal" isn't a strong enough reason to assume everything is fine.
How to check your offset account is working
ASIC's advice is a good starting checklist. Log into your bank's app or online banking and confirm:
- It's actually set up. Your offset account should appear as a linked account against your home loan, not just a separate everyday transaction account.
- It's linked to the correct loan. This is especially worth checking if you've ever refinanced, split your loan, or switched loan products, since re-linking an offset isn't always automatic when those changes happen.
- It's actually reducing your interest. Compare the interest charged on your loan statement against what you'd expect to pay if your offset balance were correctly deducted from your loan balance before interest is calculated.
That last check is the hardest one to do by eye, because it means working out what your interest should be and comparing it to what you're actually being charged. That's exactly what this offset calculator is built for. Enter your loan balance, your offset balance, and your interest rate, and you can see the interest you should be paying each month. If the number your bank is charging doesn't match, that's your cue to contact them and ask why, quoting ASIC's REP 837 if you want to show you know what you're checking for.
If you find a problem
If your offset account isn't linked, wasn't set up when you asked for it, or clearly isn't reducing your interest, raise it with your bank directly. Under ASIC's review, banks have already been paying compensation for exactly these failures, so you're not asking for a favour, you're asking them to fix something they've already acknowledged is a widespread issue. If you don't get a satisfactory answer, you can escalate to the Australian Financial Complaints Authority.
For more general background on how offset accounts work, see ASIC's own Moneysmart guide.