ASIC has found that all eight banks it reviewed — including CBA, Westpac, ANZ, Macquarie, ING, AMP, HSBC and Great Southern Bank — have weaknesses in how they set up, link and monitor mortgage offset accounts, with more than $55 million already paid back to customers who quietly lost interest savings they were promised. The findings, published on 29 July 2026 in Report 837, land on a $349.1 billion pool of offset money and hand brokers an immediate, high-value reason to call every client with an offset on file.

Key Takeaways

  • Every bank reviewed had gaps. ASIC looked at eight lenders covering more than 70% of Australia’s $2.5 trillion home loan market and found weaknesses at all of them.
  • $55 million+ already compensated for offset failures reported between September 2023 and August 2025 — and ASIC expects that figure to rise.
  • 55% of identified failures were offsets opened but never linked to the loan. A further 22% were never opened at all.
  • Manual error is the cause — 86% of reported failures traced back to staff mistakes, not system design.
  • The harm is invisible to borrowers. Repayments don’t change, so nobody notices until someone checks.

In this article

The Numbers: $349 Billion Riding on a Feature Banks Can’t Reliably Track

As at March 2026, Australians held roughly $349.1 billion in mortgage offset accounts — a balance up 28% in two years. Almost 3.3 million Australian households carry a mortgage, and for a large share of them the offset is the single most important structural feature on the loan.

ASIC’s review, published as Report 837, Offsets, out of mind, examined loan-level data across 204,000 unique home loans settled between 1 March and 31 August 2025, plus reportable-situations data, complaints and internal controls covering September 2023 to August 2025.

The headline finding is blunt: while practices varied, ASIC identified weaknesses in how all eight banks set up, monitored and managed offset accounts.

The failure mix

Of the offset failures the banks themselves identified and reported:

  • 55% — offset account opened, but never linked to the home loan
  • 22% — offset account never opened at all
  • 14% — offset linked, but outside the timeframe the bank told the customer
  • 9% — other

And the root cause is not exotic. ASIC found that manual errors by staff accounted for 86% of all failures reported by banks in their data response. This is a process and oversight problem, not a technology gap.

The Four Failures ASIC Put Its Name To

ASIC grouped its concerns into four buckets, and each has a direct read-across for brokers.

1. Banks couldn’t readily identify who had asked for an offset

Every bank had a process to capture an offset request at origination. Several could not then produce a single authoritative record of those requests — some had to run significant manual file reviews just to answer ASIC’s questions.

2. Detection was inconsistent — and complaint-driven

Some banks were simply unaware they were failing to link offsets, becoming aware only after a customer complained. One bank took nine months to introduce an offset account exception report.

3. Remediation was slow and incomplete

Even where failures were spotted, ASIC says some banks failed to properly assess the extent of customer loss or compensate for it.

4. Customers had no way to check

Many borrowers could not confirm through their app whether the offset was set up, linked to the right loan, and actually reducing interest. Some banks did not warn customers that a loan variation — a product switch, a split, a refinance — could delink the offset.

The Eight Banks in the Frame — and Why the Rest Should Read It Anyway

ASIC reviewed:

  • AMP Bank Limited
  • Australia and New Zealand Banking Group
  • Commonwealth Bank of Australia
  • Credit Union Australia Ltd (Great Southern Bank)
  • HSBC Bank Australia Limited
  • ING Bank (Australia) Limited
  • Macquarie Group Ltd
  • Westpac Banking Corporation

Together they represent more than 70% of the home loan market. But ASIC was explicit that the scope of the review is not the scope of the problem. As ASIC Chair Sarah Court put it: “While the banks we reviewed have implemented or committed to making improvements, ASIC’s findings are relevant to all banks offering offset accounts.”

If you place volume with a non-bank, a mutual, or a second-tier lender that wasn’t on the list, the correct assumption is that the same manual-process risk exists there — it simply hasn’t been measured.

Why Offset Failures Stay Invisible for Years

This is the part that makes offset failures different from most conduct issues, and it’s the part worth explaining to clients.

When an offset isn’t working, nothing on the client’s statement looks wrong. The repayment amount is unchanged. The direct debit clears. The balance in the “offset” account sits there looking useful. What actually happens is that more of each repayment goes to interest and less to principal — so the loan term quietly stretches out.

Sarah Court’s framing was direct:

“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. Customers are doubly hit – not only losing promised interest savings but also the opportunity to use that money elsewhere.”

— Sarah Court, ASIC Chair

She added a line that should get every lender’s attention: “In some cases, offset failures went undetected until ASIC started asking questions. That should concern every bank offering offset accounts.”

The compounding effect matters. On a $650,000 loan at 5.9%, a $60,000 offset balance that isn’t linked costs roughly $3,500 a year in interest — and that’s before you count the extra years on the term. A client whose offset sat unlinked for three years is meaningfully worse off, and they had no way to know.

What This Means for Australian Brokers

Three things change for brokers this week.

The offset recommendation now carries a verification expectation

Offsets are one of the most common structural recommendations on a residential file. ASIC has now formally documented that the feature frequently isn’t delivered as promised. Recommending it and never confirming it was switched on is a weaker position today than it was last week.

You have the best reactivation reason of the year

This is a genuinely useful, non-salesy reason to contact every past client with an offset on file. It isn’t a rate pitch — it’s “the regulator just found this is going wrong across the market, and I want to check yours is right.” That call will beat a generic refinance touchpoint by a wide margin.

Loan variations are the danger zone

ASIC flagged that product switches, refinances and other loan changes can delink an offset — and that banks often don’t tell the customer. Every repricing, split, top-up or switch you’ve arranged is a candidate, including the ones the client did directly with the lender after settlement.

The Offset Audit: Five Checks to Run Across Your Back Book

A practical sequence you can run this month.

Step 1 — Pull the list

Filter your CRM for every settled file where an offset was part of the recommendation. Prioritise clients who’ve had a variation, split, top-up or product switch since settlement — that’s where ASIC says the delinking happens.

Step 2 — Confirm the offset exists

Not “was requested.” Exists. ASIC found 22% of identified failures were accounts never opened at all.

Step 3 — Confirm it’s linked to the right loan

The single biggest failure category at 55%. On split loans, confirm which split it’s attached to — an offset on the wrong split still shows as “linked” and is still costing the client.

Step 4 — Confirm it’s actually reducing interest

Ask the client to check their app: is interest calculated on the loan balance net of the offset? ASIC’s own consumer guidance is exactly this — check it’s set up, linked to the correct loan, and saving interest.

Step 5 — File-note it

Record the check, the date, the client’s confirmation and any escalation. If a failure surfaces, that note is your evidence you acted — and it sits neatly in a BID file.

Two supporting tools: ASIC’s Moneysmart offset accounts page is a credible explainer to send clients, and our Offset Account Calculator shows in dollars what their offset should be saving — which makes a discrepancy obvious fast.

The Best Interests Duty Angle Nobody Is Talking About Yet

Best Interests Duty attaches to the credit assistance you provide, not the bank’s back-office execution. A broker who recommends an offset for sound reasons, documents why, and lodges it correctly has discharged their obligation. The bank’s failure to link the account is the bank’s failure.

But the context just shifted. ASIC has now published, in a numbered report, that offset delivery fails at a material rate across the major banks. A known, documented, market-wide execution risk is harder to ignore than an unknown one.

Raise it with your aggregator’s compliance team rather than guessing. The reasonable position — and the one that costs you almost nothing — is to build a post-settlement offset confirmation into your process and note it on file, turning a market-wide risk into a documented control. Separately, ASIC’s thematic review into broker BID compliance is due by Q4. Tightening process in response to regulator findings is a useful thing to have on the record before that lands.

How to Raise It With Clients Without Torching the Lender

You don’t want this call to read as “your bank ripped you off.” You want it to read as “I check things.”

A workable frame: “ASIC released a report this week showing offset accounts across the major banks aren’t always linked properly — it’s a process issue, and the customer usually can’t see it. I’m checking it across all my clients. Can you open your app and confirm three things for me?”

Then walk them through the checks. If it’s fine, you’ve delivered two minutes of genuine value and reminded them you exist. If it’s not, you’ve found real money — and you’re the one who found it.

If a failure surfaces, the path is: client raises it with the bank, the bank assesses loss and compensates, and if the response is inadequate, AFCA. Your role is helping the client document when the offset was requested and when it should have been linked — exactly the record ASIC says the banks themselves often couldn’t produce.

What Happens Next

ASIC says it will keep monitoring how banks respond and will take further action where appropriate. Three things to watch:

  • The compensation number. ASIC expects the $55 million figure to grow as remediation continues past the review window. Expect individual bank announcements.
  • Lender process changes. ASIC wants centralised records of offset requests, routine functionality audits and clear delinking warnings. Ask your BDMs what’s changing.
  • Scope creep. Non-banks, mutuals and second-tier lenders weren’t reviewed. If this is a manual-process problem, smaller operations with thinner controls are not obviously safer.

The Bottom Line

This isn’t a scandal so much as systemic sloppiness — 86% manual error, on a feature holding $349 billion of Australians’ money, where the customer is structurally unable to detect the problem. That combination is why it ran undetected long enough to require $55 million in compensation and counting.

For brokers, the read is simple. The regulator has handed you a legitimate, high-trust reason to contact your entire back book — one that has nothing to do with rate and everything to do with looking after people. Brokers who run an offset audit over the next six weeks will find errors, recover real money, and generate the kind of goodwill that produces referrals for years. Brokers who file this under “bank problem, not mine” will miss it.

Watch for remediation announcements from the eight named banks, and for whether ASIC widens its lens beyond the majors. If offset failures are fundamentally a manual-process problem, this review is a starting point, not a conclusion.

Sources: ASIC media release 26-173MR (29 July 2026); ASIC Report 837; The Adviser.

Disclaimer: This article is for general information and professional development purposes only. It does not constitute legal, compliance, or financial advice. Brokers should consult their aggregator’s compliance team and, where required, seek independent legal advice regarding their obligations under the National Consumer Credit Protection Act 2009 and ASIC’s responsible lending guidelines.