The Broker Times · By the numbers
Offset Account Failures: What ASIC Measured, and the Four Moments the Link Drops
ASIC reviewed eight banks holding more than 70% of the Australian home loan market. The failures it found were mostly invisible to the customer, because the repayment never changes.
The scale of what is sitting in offset
What the review covered
How the failures broke down
The four moments a link can silently drop
Settlement
The account is requested at origination but never opened, or opened and never linked to the loan.
Internal refinance
A new loan replaces the old one. ASIC found a bank where a separate re-link request was required, and the broker was not told.
Variable to fixed
ASIC says a bank will typically delink an existing offset when a borrower moves from variable to fixed.
Product switch or fixed-rate expiry
Seven of the eight banks relied on manual processing for these in-life requests.
Why the client does not notice. An unlinked offset does not change the required repayment. ASIC’s worked example: a $750,000 loan over 30 years at 6.25%, with an average $50,000 offset balance, paid over $3,000 in extra interest in one year. Left undetected for the life of the loan, that borrower would forgo nearly $230,000 in interest savings and take an extra four years to repay.
Compliance · Offset accounts
ASIC Found Four Cases Where a Bank Never Told the Broker the Offset Needed Re-Linking. Two of Those Clients Paid More Than $17,000 in Extra Interest
The Senate has summoned four major bank chief executives over offset account failures. The finding that touches your files is one case study deep in ASIC’s report — and it sits at an internal refinance.
Key takeaways
- ASIC’s REP 837 describes four cases at one bank where the settlement team did not tell the customer’s broker that an offset account needed re-linking after an internal refinance. ASIC says two customers paid more than $17,000 in extra interest as a result.
- That bank is now running a remediation program to identify and compensate customers whose brokers were not notified before settlement.
- ASIC says a bank will typically delink an existing offset when a borrower refinances or moves from a variable rate to a fixed rate, and the customer usually has to make a new request to re-link it. Seven of the eight banks reviewed relied on manual processing for these in-life requests.
- Because an unlinked offset does not change the required repayment, neither the client nor the broker sees anything wrong. The practical defence is a check at settlement and a diarised check after each product change.
- ASIC attributes these failures to bank processes — manual staff error accounted for 86% of those reported. The report does not examine broker conduct at all. The point for brokers is detection and client communication.
Four major bank chief executives have been asked to explain themselves in Canberra over mortgage offset accounts that did not do what their banks promised. For brokers, though, the number that matters is not in the summons. It is in a short case study in ASIC’s July report, where a bank’s settlement team failed to tell the customer’s broker that an offset account needed re-linking after an internal refinance — and, in ASIC’s words, “two customers paid more than $17,000 in extra interest.”
It is the only place in the entire 19-page report where a broker appears. Which is the uncomfortable part: the channel that carried the client’s instruction was the one that was not told the instruction had to be given again.
What the Senate has actually set up
On 15 September 2026 the Senate referred the matter of “mortgage offset accounts” to its Economics References Committee, on a motion moved by Senator Slade Brockman on behalf of Senator Andrew Bragg. The committee is due to report by 7 June 2027.
The terms of reference are broader than a single scandal. They cover the establishment of offset accounts “including setup and linking of accounts”; ongoing management and governance arrangements, “including policies, procedures and internal controls”; the costs and fees of offset accounts versus their benefits for customers; “the identification of account failures and internal incident reporting and escalation”; remediation and compensation for affected customers; and the impact on borrowers, “including increased interest costs, effects on mortgage repayments and sustainability of home ownership.”
The Adviser reported on 20 October that Senator Bragg, the Shadow Minister for Housing and Homelessness, wrote on Friday 16 October to the chief executives of the four largest banks — Matt Comyn at CBA, Anthony Miller at Westpac, Andrew Irvine at NAB and Nuno Matos at ANZ — asking them to appear before the committee in Canberra. The Broker Times has not independently sighted those letters. Worth noting: NAB was not one of the eight banks ASIC reviewed.
The numbers ASIC put on it
The report is REP 837 Offsets, out of mind: Banks fall short on mortgage offset account promises, published on 29 July 2026. ASIC reviewed eight banks representing more than 70% of the Australian home loan market as at 31 March 2026: AMP Bank, ANZ, CBA, Credit Union Australia, HSBC Bank Australia, ING Bank (Australia), Macquarie Group and Westpac.
Offset is now a very large pool. ASIC puts $349.1 billion in offset accounts as at March 2026, up 28% over the previous two years, representing 14% of total loans against 12% two years earlier. Over the review period from 1 September 2023 to 31 August 2025, banks paid more than $55 million in customer compensation for offset account failures reported to ASIC.
ASIC looked at loan-level data for 204,000 unique home loans settled between 1 March and 31 August 2025 — each bank supplied data on every second loan settled in that window. Of the failures the banks themselves identified in that data, 55% were accounts that had been opened but never linked, 22% were accounts never opened at all, 14% were linked outside the timeframes the bank had communicated to the customer, and 9% were other causes. Manual staff error accounted for 86% of the failures reported.
The detection record is the part that should give brokers pause. ASIC says the banks had failed to detect 77% of the reported offset account failures before ASIC’s data request landed, although it notes one bank accounted for most of those. One bank discovered in September 2025 that an offset exception report — its main tool for finding these failures — had not been reviewed for almost five years.
“Customers are doubly hit – not only losing promised interest savings but also the opportunity to use that money elsewhere.”
Sarah Court, Chair, ASIC — media release 26-173MR, 29 July 2026
Read these figures as a floor, not a ceiling. ASIC says plainly that the low volume of failures the banks reported “may not accurately reflect the true extent” of the problem, that data quality varied significantly across the eight banks, and that the review did not assess how banks calculated interest. Five of the eight were running or had committed to offset-related remediation programs, and banks were still paying compensation to hundreds of customers after the review period closed.
The case study that sits on a broker’s file
Here is the finding in full, as ASIC describes it. A system limitation meant one bank could not automatically link an offset account to a new loan if that account was already linked to an existing loan. For internal refinancing, then, a separate request was required to re-link the offset to the new loan.
ASIC case study — REP 837
“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. As a result, 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.”
Two things are worth being precise about. ASIC does not name the bank, and it does not say how the extra interest was divided between the two customers — the report gives the figure for the two of them and leaves it there. The second point is the framing of the fix: the remediation program ASIC describes is defined by the broker not being notified. The bank has treated failing to tell the broker as the failure.
That matters because it establishes the mechanism rather than the blame. A broker who lodged an internal refinance at that bank, did everything correctly, and was never told a re-link request was needed had no way of knowing the client’s offset had gone dark. The instruction did not fail. The hand-back of the instruction failed.
Where the link drops, and why nobody sees it
ASIC sets out the mechanics clearly: “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.”
So the risk clusters at the moments brokers are most involved in: an internal refinance, a switch from variable to fixed, a fixed-rate expiry rolling back to variable, and a product switch. Seven of the eight banks relied on manual processing for in-life requests, and ASIC found that 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.”
ASIC also found that some banks “did not clearly warn customers that a loan change could delink their offset account or explain what the customer needed to do,” and that complaint records suggest many customers did not understand a separate re-link request was required. One bank’s better practice, by contrast, was a letter four to six weeks before fixed-rate expiry spelling out that the offset would not re-link itself.
The reason this stays hidden is mechanical. An unlinked offset does not change the required repayment. The direct debit comes out at the same figure it always did; more of it just goes to interest. ASIC’s own worked example runs a $750,000 loan over 30 years at 6.25% with an average $50,000 offset balance: more than $3,000 in extra interest over a single year, and if the error ran the life of the loan, nearly $230,000 in foregone interest savings and four extra years of repayments.
Nor can the client always check. ASIC found some banks did not show in their app 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 in statements. Only two of the eight used channels like their mobile app to tell customers when an offset was not linked.
Why a bank’s error still reaches the broker
None of this is a broker compliance failure, and it should not be written up as one. But three consequences land on the broker’s desk regardless.
The offset is often why the recommended product costs more
ASIC notes that customers “typically pay more for offset accounts through higher interest rates, additional account fees, or a combination of both.” That is the ordinary trade-off a broker explains and records: this product is dearer, and here is the feature that justifies it. If the feature never operated, the client paid the premium and received nothing for it. The reasoning on the file was sound; the outcome diverged from it through someone else’s process.
Brokers operate under the best interests duty in the National Consumer Credit Protection Act 2009, and how that duty interacts with a lender’s post-settlement execution failure is not a question this article can settle. It is a question for your licensee or aggregator’s compliance team, and a sensible one to put to them now rather than after a client calls. What is uncontroversial is that a recommendation justified by a feature is strengthened by evidence the feature actually switched on.
The client rings you, not the bank
Brokers already know where the call goes. If this becomes a mainstream consumer story through the Senate hearings — and a parliamentary inquiry with four bank CEOs in the room is designed to do exactly that — the question “is my offset actually working?” arrives in the broker channel first. Being able to answer it for a named client inside a day is a retention asset. Hearing about it from your client’s accountant is not.
An unlinked offset quietly narrows the next refinance
This one is easy to miss. ASIC points out that customers affected by offset failures “may also be left with a higher loan balance than they otherwise would, reducing the benefits of refinancing to a more competitive home loan product.” In a market where a valuation and an LVR band decide whether a refinance clears, a balance that is wrong by a year of missed offset benefit can be the difference between a deal that works and one that does not.
What to do this week
Broker action checklist
- Add a settlement-day offset confirmation to your process. For any file where an offset was requested, confirm in writing with the lender that the account exists and is linked to the correct loan account number. ASIC found linking to the wrong loan was a failure type that several banks’ controls could not reliably detect.
- Diary a check 14 to 30 days post-settlement. Long enough for a statement cycle to show whether interest is actually being reduced. ASIC’s advice to consumers is the same three-part test: set up, linked to the correct loan, and receiving the benefit of saving interest.
- Flag the four delink moments in your CRM. Internal refinance, variable to fixed, fixed-rate expiry, product switch. Treat each as an event requiring a fresh re-link confirmation rather than assuming the offset carries across.
- Sweep the back book you already know about. Pull clients on offset-bearing products who have had any in-life change since 2023 — particularly internal refinances and fixed-rate rollovers at the eight banks named in the review. That is a mail-merge and a question, not a project.
- Ask your aggregator what its lenders’ re-link process actually is. Whether a re-link is automatic, whether the broker is notified, and who is responsible for lodging the request differs by lender. That answer belongs in your process notes, not in your memory.
- If you find a suspected failure, route it properly. Do not attempt to calculate the client’s loss yourself. Direct the client to the lender’s internal dispute resolution process, with AFCA as the external step if the lender’s response is unsatisfactory, and record the date you raised it and with whom. Remediation and compensation are the bank’s obligations, and ASIC has made clear it expects banks to meet them.
What to watch next
Two things, on different clocks.
The Senate committee reports by 7 June 2027, with submissions and public hearings before that. Its terms of reference run to “any other related matters,” and The Adviser reported that Senator Bragg wants the inquiry to examine whether ASIC imposes adequate consequences where consumers suffer harm — so the regulator’s posture may be in scope alongside the banks’. The published terms of reference do not themselves name ASIC.
Closer in, ASIC’s supervisory letter to bank boards and executives of 30 September 2026 tells banks they “should consider the findings of REP 837” and ensure customers receive the offset benefits they were promised, adding that ASIC “will continue to monitor this issue going forward and take action where appropriate.” The same letter flags a review into lender conduct, expected in the third quarter of 2026–27, likely to cover the use of referrers by lenders and lender oversight of brokers. That second review is one brokers will want to read when it lands.
The strategic read
The commercial lesson here is not about offsets. It is that a broker’s recommendation is only as good as the lender’s execution of it, and brokers have almost no visibility of that execution once a file settles. ASIC’s report is a catalogue of things that went wrong on the other side of a hand-off: requests that were never recorded, exception reports nobody read for five years, quality assurance limited at one bank to four applications per staff member per month.
Brokers cannot fix any of that. What they can do is build the one check the system did not have — a confirmation, in writing, that the feature they recommended is switched on and reducing interest — and treat every product change as the moment it might have switched off. In a year where client retention is harder and refinance volumes are thinner, a broker who rings a client to say “I checked your offset and it’s working” is doing something no lender in that report managed to do reliably.
Frequently asked
On ASIC’s findings, the failures were bank process failures — manual error, missing records, controls that did not detect problems. In the case study involving a broker, the bank’s own remediation program is framed around the bank’s failure to notify the broker before settlement. Whether and how your own obligations are engaged in any particular file is a question for your licensee or aggregator’s compliance team, not something this article can answer.
Eight banks: AMP Bank Limited, Australia and New Zealand Banking Group, Commonwealth Bank of Australia, Credit Union Australia Ltd, HSBC Bank Australia Limited, ING Bank (Australia) Limited, Macquarie Group Ltd and Westpac Banking Corporation. Together they represented more than 70% of the Australian home loan market as at 31 March 2026. ASIC did not attribute specific failures to named banks, and it encouraged all banks, not just those reviewed, to act on the findings.
Often they would not, which is the whole problem. The required repayment does not change when an offset is unlinked, so nothing looks wrong. ASIC’s guidance to consumers is to check that the account has been set up, that it is linked to the correct home loan, and that it is actually saving interest — starting with the bank’s app or online banking, and asking the bank directly if the information is not there. ASIC found some banks’ apps did not display that information at all.
ASIC says a bank will typically delink an existing offset when a customer makes certain in-life requests, including refinancing or moving from a variable rate to a fixed rate, and that the customer usually needs to make a new request to re-link it. It varies by lender and by product, which is exactly why the re-link process is worth confirming with each lender on your panel rather than assuming.
Compensation for offset account failures is the bank’s responsibility, and ASIC’s definition of compensation covers correcting the failure and reimbursing the customer for financial loss. ASIC criticised banks that only compensated customers who complained, and five of the eight banks were running or had committed to remediation programs. The practical route for a client is the lender’s internal dispute resolution process first, then AFCA if the outcome is unsatisfactory.
Stay ahead of what lands on your files
The Broker Times tracks the regulatory, lender and policy changes that actually change a broker’s process — not just the headline.
Interactive · Broker tool
Offset Link Exposure Checker
Pick the loan event that happened on your client’s file. You will get what ASIC found about that moment, the check worth making, and the question to put to the lender.
Step 1 — Which event applies?
These are the four points across a loan’s life where ASIC identified offset accounts failing.
Settlement of a new loan
Of the failures banks identified in their data, 55% were offset accounts that had been opened but never linked to the loan, and 22% were accounts never opened at all. ASIC also found some banks could not readily identify whether a customer had requested an offset in the first place, with one bank unable to retrieve the request date at scale because the form was not digitised. Where banks could not reach a customer to confirm instructions, some “made assumptions about customer instructions or proceeded to settlement without linking the offset account.”
Confirm in writing at or immediately after settlement that the offset account exists and is linked to the correct loan account number, then re-check after one statement cycle that interest is actually being reduced. Linking to the wrong loan was a failure type several banks’ controls could not reliably detect.
“Can you confirm the offset account number and the loan account number it is linked to, and that the link is active as at today’s date?”
Internal refinance
This is the moment that produced the only broker-specific finding in the report. A system limitation at one bank meant an offset could not be automatically linked to a new loan if it was already linked to an existing one, so an internal refinance required a separate re-link request. In four cases, the bank’s settlement team did not tell the customer’s broker that re-linking was needed, and ASIC says two customers paid more than $17,000 in extra interest. That bank is now running a remediation program for customers whose brokers were not notified before settlement.
Treat the new loan account as having no offset until the lender confirms otherwise in writing. Do not assume the offset carried across from the loan it replaced, and do not rely on the client’s app showing a balance — ASIC found some apps do not display which loan an offset is linked to.
“On an internal refinance, does the offset re-link automatically? If not, who lodges the re-link request, and will you notify me before settlement?”
Variable to fixed, or fixed-rate expiry
ASIC states that where 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,” and the customer then usually has to make a new request to re-link it. Some banks did not clearly warn customers this would happen, and complaint records suggested many did not understand a separate request was needed. One bank’s better practice was a letter four to six weeks before fixed-rate expiry stating that the offset would not re-link itself.
Add the fixed-rate expiry date to your CRM as an offset checkpoint, not just a repricing opportunity. The rate conversation and the re-link confirmation can happen in the same call.
“When this loan rolls from fixed to variable, will the offset remain linked? If not, what notice does the client get and what do they have to do?”
Product switch or other in-life change
Seven of the eight banks relied on manual processing for in-life requests, which ASIC says “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.” Manual staff error accounted for 86% of reported failures. In one case an in-life change in April 2025 incorrectly removed an offset link, and the customer paid more than $3,500 in additional interest in just over a month before noticing.
Any variation that creates a new loan account or changes the product is an offset event. Confirm the link after the change is processed rather than when it is requested, since the failure occurs in the processing.
“Now that the variation has been processed, can you confirm the offset is still linked to the correct loan and reducing interest?”
Step 2 — Your process build
Six items that turn this from a news story into a control on your files. Tick them off as you go.
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A note on scope. This tool summarises findings in ASIC’s REP 837 and is general information only. It is not legal or compliance advice, it does not establish what any obligation requires of you, and lender processes differ. Confirm the position for your own files with your licensee or aggregator’s compliance team.
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.
