The Senate Put Offset Accounts Under Inquiry Until June 2027. The Terms of Reference Never Mention the Channel Writing 81.6% of Loans

On 15 September the Senate referred mortgage offset accounts to its Economics References Committee. The committee reports by 7 June 2027, which makes this a nine-month inquiry into a product sitting on a large share of the loans in your book.

The Broker Times has already covered what ASIC found in REP 837 and where offset links break on broker-triggered events. This is not that article. This is about the eight paragraphs the Senate actually agreed to examine, what a references committee inquiry can and cannot change, and a gap in the terms of reference that the broker channel has until roughly the middle of next year to do something about.

The eight paragraphs, in full

The motion was moved on 15 September by Senator Slade Brockman, at the request of Senator Andrew Bragg, the Shadow Minister for Housing and Homelessness. It refers “Mortgage offset accounts” to the Economics References Committee for inquiry and report by 7 June 2027, with particular reference to:

• (a) the establishment of home mortgage offset accounts, including setup and linking of accounts;
• (b) the implementation of ongoing management and governance arrangements, including policies, procedures and internal controls;
• (c) the impact of costs and fees versus benefits of offset accounts for customers;
• (d) the identification of account failures and internal incident reporting and escalation;
• (e) remediation for customers affected by account failures;
• (f) compensation for customers experiencing account failures;
• (g) the impact on mortgagees and implications for home ownership including increased interest costs, effects on mortgage repayments and sustainability of home ownership; and
• (h) any other related matters.

Read that list as a whole and a shape emerges. Paragraphs (a), (b) and (d) are about how the product is set up and governed. Paragraphs (e) and (f) are about what happens once something has already broken. Paragraph (g) is the consumer harm. Paragraph (c) is the only one that asks whether offset accounts are worth what customers pay for them in the first place.

What is not in the list is any reference to distribution. There is no paragraph on origination channels, no mention of brokers, aggregators or the third-party channel, and nothing directing the committee to consider how a customer’s offset request travels from the person who took the instruction to the institution that has to action it.

Why that omission matters commercially

Broker market share reached a record 81.6 per cent in the June quarter on MFAA figures. Paragraph (a) — the establishment, setup and linking of offset accounts — describes a step that, for four out of five new residential loans, begins on a broker’s file.

An inquiry that examines how offset accounts get established without examining the channel that establishes most of them is going to build its picture from whoever turns up. The institutions named in ASIC’s review have government relations teams and a clear interest in framing the setup process as one that works. If nobody describes the handover from the broker’s side — what gets recorded, what gets passed on, what comes back, and what does not — the committee will form its view of paragraph (a) from one end of the chain.

That matters because recommendations write themselves into obligations later. A committee that concludes offset failures are fundamentally a documentation problem at origination may well recommend more documentation at origination. Whether that obligation lands on lenders or gets pushed down the chain to the people lodging the applications is exactly the sort of detail that gets settled by who was in the room.

What a references committee can actually do

It is worth being clear-eyed, because “Senate inquiry” carries more menace in a headline than it does in practice.

A Senate references committee inquiry is not an enforcement action. It cannot fine anyone, cannot order remediation, and cannot compel a bank to change a system. It gathers evidence, holds hearings, and produces a report with recommendations. Those recommendations bind nobody — not the government, not the regulators, not the banks. Plenty of committee reports are tabled and never acted on.

Equally, it is not nothing. Inquiries are where a problem gets a public record, where executives answer questions on transcript, and where a future minister finds a ready-made list of things to do. Senator Bragg has said, as reported by The Adviser, that “the major banks are not above reproach. We expect to hear from their top brass.” The same report attributes to him the view that “it’s not good enough for a major scandal like this to be unearthed by financial regulators and for that to be the end of it,” and a claim that ASIC’s referrals to the Director of Public Prosecutions have “almost halved over the past half decade.” Those are the Senator’s characterisations, reported by one outlet. The committee itself has made no findings about anyone and has not yet held a hearing.

The honest summary for a broker is this: nothing about your obligations changes today, and there is a reasonable chance nothing changes in June 2027 either. But the cost of contributing is low and the window is long.

The one ASIC finding worth carrying into a submission

Most of REP 837 has been well covered. One finding has not had much attention and is the most useful thing a broker can build a submission around.

ASIC found that “while all banks had processes to capture a customer’s request for an offset account during loan origination, some did not have a central document or single authoritative record of this information.”

Every bank reviewed had a process. Some had no single authoritative record of the result.

That is a gap with a broker-shaped hole in it. Where a loan came through the third-party channel, the clearest dated, contemporaneous evidence of what the client asked for frequently sits on the broker’s file rather than the lender’s — in the fact find, the product discussion note, the preliminary assessment and the application as lodged. None of it was created to serve as evidence in a remediation exercise. It functions that way regardless.

ASIC also noted a thinner record on the servicing side: one bank was not consistently documenting in-life requests made by customers in branches, because those were actioned in real time and were not required to be written down.

A submission that says “offset failures are bad” tells the committee nothing it does not have. A submission that says “here is what my file recorded, here is what the lender’s system retained, and here is where the two diverged” gives it paragraph (a) evidence it cannot get from anyone else.

If you are going to contribute, contribute something specific

Submissions to a Senate committee are public documents unless the committee accepts them confidentially, and they are read by people with no working knowledge of how a loan gets lodged. The useful ones are concrete.

Map what you say to a paragraph

Committees work through their terms of reference. Evidence about how an offset request is captured and passed to a lender belongs under (a). Evidence about who notices a broken link, and how it gets escalated, belongs under (d). Evidence about what a client had to do to be compensated belongs under (e) and (f). If your point genuinely does not fit anywhere, (h) exists for exactly that.

Use a real file, properly de-identified

One documented case with dates, showing what was requested, what was actioned and what the client lost, is worth more than a page of industry sentiment. Strip client identifiers before you send anything, and check your privacy obligations and your licensee’s policy on external communications first — a submission is a publication.

Go through your aggregator or association if that is easier

Aggregators, the MFAA and the FBAA will likely coordinate submissions and will have the resourcing to do it properly. Feeding a case study into an industry submission is a legitimate and much lower-effort contribution than lodging your own, and it puts the same evidence in front of the committee.

Check the process rather than trusting a reported date

At the time of writing the committee had not published a submission closing date. Do not work from a date you have seen repeated second-hand. The inquiry has a page on the Parliament of Australia website carrying the terms of reference, the submission process and the secretariat’s contact details, and the Senate Economics committee secretariat can be contacted directly.

What to watch between now and June 2027

Three markers will tell you whether this inquiry is going anywhere.

The submission deadline and the hearing list. A committee that schedules hearings with bank executives is running a live inquiry. One that quietly extends its reporting date twice is not.

Whether any lender moves first. The commercially interesting outcome is a lender deciding, ahead of any recommendation, to confirm offset linking back to the originating broker as a matter of course. That would be a genuine service differentiator, it would cost very little, and it is worth noting on your panel if someone does it.

Whether the remediation figures keep moving. ASIC noted one bank paid $1.4 million after reviewing loans back to 2019. That suggests the reported totals reflect how far back each institution chose to look at least as much as they reflect the underlying scale. Numbers that keep climbing through the inquiry period will shape the committee’s recommendations more than any submission will.

The takeaway

This inquiry imposes no obligation on brokers, creates no new compliance step, and may ultimately recommend nothing. Treat it as a scheduling item, not an emergency.

But the terms of reference open with the setup and linking of offset accounts, and they never once mention the channel that originates most of them. There is a nine-month window to make sure the committee’s picture of paragraph (a) includes the end of the chain where the client’s instruction is actually taken down. The channel writes 81.6 per cent of the loans. It should not end up with nought per cent of the evidence.