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'Hidden' harm as ASIC finds mortgage borrowers miss out on millions in offset savings
In short:
Millions of Australians use offset accounts to reduce interest costs on their mortgage, but the corporate regulator says some banks are not delivering the savings as promised.
ASIC found Australian banks paid more than $55 million in compensation to customers in just two years, for failures with mortgage offset accounts.
What's next?
The regulator said several banks had begun remediation and it would monitor their fixes, provide individual feedback and consider further regulatory action
Banks charged mortgage holders $55m in extra interest after offset account errors, Asic finds
Banks charged mortgage holders $55m in extra interest after offset account errors, Asic finds Australian banks ‘not getting the basics right’, regulator says after review of more than 200,000 home loans
Bank errors adding thousands in interset and years to home loans
Bank glitches are costing mortgage holders thousands in unnecessary interest and adding years to their home loans. Here’s how to audit yours.
A number of the nation’s biggest banks have been caught shortchanging the millions of Australians with $349.1 billion sitting in offset accounts.
Administrative errors mean customers are unknowingly paying thousands of dollars in extra interest and adding years to the life of a loan.
Are you paying thousands more on your mortgage than you should be? Bethany Rae
The Australian Securities and Investments Commission reviewed 204,000 loans settled between March and August last year with eight banks – AMP Bank, ANZ, CBA, CUA (Great Southern Bank), HSBC, ING, Macquarie, and Westpac.
It found that offset accounts are marketed to customers as a simple way to save on mortgage interest over the life of a home loan, but some banks are failing to deliver on what they promise.
The breadth of the problem is demonstrated in the following figures: between September 1, 2023 and August 31, 2025, banks paid more than $55 million in customer compensation for offset account failures. More payouts are expected.
“This highlights the significant impact these failures can have on customers and raises concerns about whether banks are consistently delivering the expected benefits of offset accounts to their customers,” the report says.
ASIC says almost 3.3 million Australian households have a home loan, while research from the Reserve Bank of Australia (RBA) shows that about 40 per cent of Australian mortgage holders use a mortgage offset account.
The scourge of unlinked accounts
Unlinked accounts are the biggest problem. This is where the bank opens the account or leaves money in it but fails to tie it to the home loan.
The ASIC report says this is the primary driver of financial harm.
In one example cited in the report, a couple – James and Mia – paid $3000 in additional interest in a year after their bank failed to correctly link an offset account containing $50,000 to their $750,000 home loan.
The ASIC report notes that had this mistake gone unnoticed for the 30-year-life of the loan, the couple would have paid $230,000 in extra interest and taken four additional years to pay off the loan.
Four other ways banks get it wrong
There are several other scenarios where “linking” goes wrong.
In one example included in the report, a bank worker unlinked a home loan and offset account. Again the customer noticed higher than expected interest charges and made a formal complaint. The bank error cost $3500 extra in one month alone.
In a third example, four customers refinanced their loans internally with the same bank, but the company’s systems couldn’t automatically relink offset accounts to a new loan number.
A manual process was required but the bank failed to tell the customers. Two of the customers overpaid interest of more than $17,000 before the error was caught.
Why and when do things go wrong
The ASIC report identifies changes during the life of the loan – “in life” changes – as the primary culprits for errors. Examples of these changes include: switching from a variable to fixed rate; refinancing internally; changing loan products.
The ‘invisibility factor’
ASIC calls out a massive “invisibility” factor. Unlike the overcharging of a direct debit or listing of an incorrect rate of interest, mistakes involving offset accounts can be difficult to detect.
The monthly repayments on a loan stay the same, which means errors can remain hidden for years.
Plus, customers don’t always see important offset account details in their bank’s mobile app, the report says.
“When customers cannot easily check whether an offset account is linked or saving interest, they may be unable to identify problems and, therefore, unable to raise them with their bank.
“This matters even more when banks struggle to find offset account failures themselves. Without clear, accessible information, customers can overpay interest without realising.”
What excellent service looks like
Best practice by one bank is identified in the ASIC report. The unnamed bank provides an offset dashboard in its mobile app and online banking website that displays key details, including which offset accounts are linked; which home loan they are linked to; and, the interest saved over the financial year.
A three-step check to perform today
Meet the senior CBA exec who started his career as a bank teller
Aaron Bergstrum, the premier banking state manager for Queensland, Western Australia and South Australia, started from a role directly serving customers.
By all accounts, it took Aaron Bergstrum a few months to settle into his studies at university.
Bergstrum, state manager for Queensland, Western Australia and South Australia for premier banking at Commonwealth Bank, first enrolled in sports science. The course involved too much anatomy, so he quit after a semester and switched to a business and finance degree. The content was fine, but after three months Bergstrum realised full-time university life was not for him.
“I tried for three months, and I couldn’t do it,” recalls Bergstrum, who is today named one of the BOSS Young Executives for 2026.
Now in its 23rd year, the BOSS Young Executives program recognises emerging leaders aged 35 or younger who demonstrate leadership in the community and business, and who have a strong track record in people and thought leadership.
“I tried the sleep-in, the two-minute noodles, the hanging out on campus, and sitting on the grass for a few hours in between lectures, but it just wasn’t me.
“I’m one of these people that when I’ve got a spare moment, I feel like it’s got to be filled with something productive. [University] just wasn’t intense enough for me. I found more passion being a young person in a real grown-ups world, still keeping my cogs going at night-time, but during the day actually be with professionals and learning how to be an adult,” Bergstrum says.
So Bergstrum, who grew up in Brisbane with his parents and sister, got himself a job in the local Westpac branch and continued his university studies at night, later undertaking an executive MBA at Queensland University of Technology the same way. Within a year of joining Westpac, Bergstrum knew he wanted to go a lot further in financial services.
“I could see the value that you could actually add to a client.”
As a kid, Bergstrum says he would have been a “nightmare” for his parents, given his propensity to get bored. Much of his childhood was filled with sport, including athletics, where he competed in national hurdling competitions. Athletics involved intense training – he was doing so alongside Olympians such as Sally Pearson – but that chapter came crashing down when he was about 19 and his coach forced him to choose between hurdles and banking and university. Bergstrum quit the next day.
Luckily Bergstrum, who is married with two young children and whose go-to sport these days is doing triathlons, loved branch life, which he says taught him a lot about work ethic, respect and kindness, and attention to detail.
“Kindness goes a long way. Everyone’s got something going on in their personal life that you can’t take for granted. Treat everyone with care and respect.” To this day, Bergstrum argues it is critical for anyone in the customer service industry to gain frontline experience.
Working his way up
The 2026 BOSS Young Executive spent 13 years at Westpac, much of it in branches. After his role as a teller, Bergstrum held positions as a personal banker, business banker, home finance lender, bank manager and leader of bank managers.
He moved to CBA a year ago. He wasn’t looking to change jobs, but the challenge was too good to reject. CBA’s premier banking division supports the lender’s affluent customers, and CBA wanted to expand the division and provide more one-on-one relationship banking services.
“It was exciting. It was a transformational job. They [needed] someone to help scale up and transform this business and add value to the culture and the employee sentiment, and that’s a challenge I really wanted. [It had a] balance of strategy, people and risk.”
Bergstrum has about 100 people in his team.
Asked about the career advice he has treasured, Bergstrum says: “Work harder than everybody else, treat everybody with care and respect, and be patient.
“You’ve got to work really, really hard. You can’t turn up to game day and expect to play better than everybody else if you haven’t trained harder than everybody else.”
He concedes the patience part comes less easily.
So how does an executive who is so prone to getting bored relax?
“My family’s my relaxation. That’s always something that I’m grappling with, to make sure that I have an equal balance between family and work. The love I have for my job and the business will never be beaten by the love I’ve got for my family.”
Fortunately, family life involves sport in the form of coaching and refereeing his son’s Australian Football Rules team.