$55m Repaid on Broken Offset Accounts. In One ASIC Case Study the Lender Never Told the Broker

What ASIC actually found

ASIC’s Report 837, Offsets, out of mind: Banks fall short on mortgage offset account promises, was published on 29 July 2026. The regulator reviewed eight banks representing more than 70% of the Australian home loan market as at 31 March 2026, and pulled loan-level data on 204,000 unique home loans settled between 1 March and 31 August 2025. ASIC’s media release names the participants as AMP Bank, ANZ, CBA, Credit Union Australia, HSBC Bank Australia, ING, Macquarie and Westpac. The case studies in the report are anonymised, and ASIC does not attribute any individual failure to a named bank.

The headline number is the compensation. Reports made to ASIC between 1 September 2023 and 31 August 2025 show banks paid more than $55 million to customers for offset account failures, measured as at 31 May 2026. That sits against roughly $349.1 billion held in offset accounts as at March 2026 — a balance that has grown 28% in two years and now represents 14% of total loans, up from 12% two years earlier.

Three findings matter more to a broker than the dollar figure:

• The banks did not know. ASIC found the banks had failed to detect 77% of the reported offset account failures before its data request, though the report notes one bank accounted for most of these.
• The cause is manual handling. Manual errors by staff accounted for 86% of all failures the banks reported in their data response — staff misreading an instruction, entering the wrong details, or missing a reminder to complete a step.
• Most failures are invisible from the outside. Of the failures banks identified, 55% were accounts that were opened but never linked, 22% were never opened at all, and 14% were linked outside the timeframe the customer had been given.

The case study with a broker in it

On page 15 of REP 837, under Finding 4, ASIC sets out a case study that has had almost no run in the trade press. It is worth setting out in full.

A system limitation meant one bank could not automatically link an offset account to a new loan if the account was already linked to an existing loan. For internal refinancing — the same bank, a new loan account — a separate request was needed to re-link the offset. In four cases provided to ASIC, the bank’s settlement team did not tell the customer’s broker that the offset account needed to be re-linked after refinancing. In ASIC’s words, “two customers paid more than $17,000 in extra interest.” The bank is now running a remediation program to identify and compensate customers whose brokers were not notified before settlement.

Read that again as a broker. The failure was the lender’s. The notification that never arrived was owed to the broker. But the client sitting in front of you at the twelve-month review does not have a mental model that separates “my broker” from “the bank my broker put me with.” They have a loan you recommended, an offset you told them about, and interest they should not have paid.

Why the failures cluster on broker-triggered events

This is the part of the report that should change a process rather than an opinion. ASIC found that seven of the eight banks relied on manual processing for in-life requests, and that this reliance “led to a high proportion of offset account failures relating to common in-life requests such as refinancing, re-linking offset accounts or switching loan products.”

Refinancing. Re-linking. Switching products. That is a description of a broker’s week.

ASIC is also explicit about the mechanics, which many clients have never had explained to them: “If a customer makes certain in-life requests, such as refinancing or moving from a variable rate to a fixed rate, a bank will typically delink an existing offset account. If that happens, the customer usually needs to make a new request to have the offset account re-linked to the eligible home loan.”

The report adds that some banks did not clearly warn customers a loan change could delink the offset, and that “complaint records suggest many customers did not understand they needed to submit a separate request to re-link their offset account.” ASIC’s view is that terms and conditions are not enough: “It is not enough to rely on inclusions in terms and conditions to ensure customers fully understand the implications of changes to their offset account.”

Where the best interests duty actually sits

It is worth being precise here, because it would be easy to over-read this report into a compliance obligation that does not exist.

ASIC’s Regulatory Guide 273 explains the best interests duty for mortgage brokers. At RG 273.116, ASIC states the duty applies “any time you provide credit assistance to the consumer, based on the information available at the time.” At RG 273.118, ASIC is equally clear about the limit: “The best interests duty does not require you to conduct a ‘periodic review’, or to provide credit assistance to the consumer in the future.”

So there is no standing legal duty to audit a client’s offset link every year. But two things sit inside the duty rather than outside it:

• Offset access is a substantive feature ASIC expects you to weigh. RG 273.71–73 lists the factors relevant to a recommendation, and names “substantive features, such as access to an offset account” among them. Where a client pays a rate premium or an account fee for an offset — which ASIC notes is how most banks charge for the feature — that cost is part of the recommendation you made.
• Telling a client to stay put is credit assistance. At RG 273.117, ASIC states that “if you provide credit assistance suggesting that a consumer remain in a home loan you previously helped them obtain, you will need to act in the consumer’s best interests when making that suggestion.” A retention conversation where the offset has silently been unlinked is a conversation built on the wrong facts.

The number that makes this a client conversation

ASIC includes a worked example in Appendix 1 of REP 837. A couple borrows $750,000 over 30 years at 6.25% and holds an average $50,000 in an offset that the bank never linked. Over one year, they pay more than $3,000 in additional interest. If the error had run the life of the loan, ASIC calculates they “would have foregone nearly $230,000 of interest savings, and it would have taken them an additional four years to repay their loan.”

A separate case study in the report shows how fast this can move on a larger balance: a bank incorrectly removed an offset link while processing an in-life change in April 2025, and in just over one month the customer paid more than $3,500 in additional interest before noticing the charges and complaining.

That hidden quality is the whole problem. A repayment that does not change is a repayment nobody queries. ASIC found the visibility gap runs through the apps as well: some banks did not show whether an offset was linked, some did not show which loan it was linked to, and half did not show how much interest the offset had saved — that figure was only available in statements. Only two of the eight banks used channels like their mobile app to tell customers when an offset was not linked.

If the client cannot see it and the bank did not detect it, the only person in the chain with both the relationship and the reason to look is the broker.

What to review this week

None of this requires new software or a new compliance framework. It requires adding one question to processes you already run.

1. Add an offset confirmation step to post-settlement

Where a client has requested an offset, confirm after settlement that the account exists, is linked to the correct loan account number, and is reducing interest. ASIC’s own guidance to consumers is to check exactly these three things. Ask the client to screenshot the linked account in their app, or confirm it with the lender directly.

2. Make “will the offset delink?” a standing lender question

Before any internal refinance, product switch, or variable-to-fixed change, ask the lender in writing whether the offset will be delinked and who is responsible for lodging the re-link request. The ASIC case study exists precisely because a settlement team assumed someone else would tell the broker.

3. Put offset re-linking into your fixed-expiry outreach

Most brokers already contact clients four to eight weeks before a fixed rate expires. ASIC cites a bank writing to customers four to six weeks out to explain offsets are not automatically linked on rollover as better practice. If the lender does not do it, you can — and it is a genuinely useful reason to call.

4. Run a back-book sample, not a full audit

Pull twenty files from the last two years where an offset was part of the recommendation and a loan change followed — a refinance, a fixed roll, a product switch. If the sample is clean, you have cheap reassurance. If it is not, you have found it before your client did.

5. Note the offset rationale in the file

Where a client is paying a rate premium or fee for an offset, record why the feature was in their interests and what balance the benefit assumed. That is the record that makes the recommendation defensible if the feature later fails.

6. Know the client’s remedy, and do not oversell it

Where a bank error has cost a client interest, the complaint goes to the lender first, and to AFCA if it is not resolved. ASIC’s position is that “customers should receive the interest savings they were promised without having to identify failures themselves” — but in practice, someone has to notice. Point the client to the lender’s internal dispute resolution process rather than characterising the outcome for them.

What to watch next

ASIC has said it will provide individual feedback to the banks in the review and continue monitoring how the deficiencies are addressed. The report’s next-steps section carries a line worth marking: “Where appropriate, we will take further regulatory action in response to some of the issues identified in this review.” Five of the eight banks are now planning audits or reviews of their offset processes, or have expanded existing reviews to include offset accounts.

For brokers, the practical signals to watch are narrower: whether lenders start notifying the broker channel when an offset requires re-linking after an internal refinance, whether app-level offset visibility improves at the banks that lacked it, and whether remediation letters start landing in your clients’ inboxes about loans you wrote. The last of those is the one most likely to generate a phone call you did not expect.

Sources: ASIC, Report 837: Offsets, out of mind: Banks fall short on mortgage offset account promises (29 July 2026); ASIC media release 26-173MR (29 July 2026); ASIC Chair Sarah Court, Opening Statement to the Parliamentary Joint Committee on Corporations and Financial Services (4 September 2026); ASIC Regulatory Guide 273, Mortgage brokers: Best interests duty.