Australian banks overcharge homebuyers due to mortgage offset account failures

The Australian Securities and Investments Commission (ASIC) reported that major lenders, including Commonwealth Bank, Westpac and ANZ, mishandled mortgage offset accounts, causing borrowers to lose millions in interest savings. Between September 2023 and August 2025 the regulator examined 204,000 home loans and identified hundreds of cases where offset accounts were not linked to the loan or were incorrectly calculated, leading to more than $55 million in extra interest charges.

ASIC found that banks often failed to detect these errors internally and relied on external inquiries to uncover the problem. As a result, customers received compensation, and the regulator pressed banks to improve their automated reconciliation controls and transparency. While more than 99 % of accounts were managed correctly, the review highlighted systemic gaps in linking deposit balances to mortgage interest calculations and called for stronger compliance and customer visibility.

ASIC chair Sarah Court warned that such failures undermine consumer trust and urged banks to fix basic operational issues, emphasizing that borrowers should not discover offset problems only after regulator intervention.