ASIC’s Probe into Mortgage Offset Accounts: What It Means for You

ASIC has become aware of cases where offset accounts haven’t been correctly linked to home loans. In those situations, the money sitting in the offset account isn’t actually reducing the interest charged

Mortgage offset accounts are one of the most popular features Australian borrowers use to save on interest. By linking your everyday account to your home loan, any money you keep in that account reduces the balance the bank charges interest on. Over the life of a loan, this can add up to tens of thousands in savings.

But recently, the Australian Securities and Investments Commission (ASIC) announced it is looking closely at whether offset accounts are always delivering the benefits promised. This is important news for anyone with an offset facility.

Why ASIC Is Taking Action about Offset Accounts

ASIC has become aware of cases where offset accounts haven’t been correctly linked to home loans. In those situations, the money sitting in the offset account isn’t actually reducing the interest charged — leaving borrowers out of pocket.

ASIC Commissioner Kate O’Rorke recently explained that the regulator has received reports of banks failing to connect offset accounts properly. With Australians holding around $300 billion in offset accounts, even small errors can cause serious losses for households.

The Australian Financial Review States…

The Australian Financial Review (31 August 2025), in an article by Joyce Moullakis, revealed that ASIC’s latest corporate plan includes a dedicated probe into offset accounts. The review highlights that about $307 billion is currently sitting in these accounts, underlining how significant this issue could be.

The article points out that this isn’t the first time concerns have been raised. In the past, banks including ANZ have had to remediate customers when offset features didn’t work as promised. This history gives weight to ASIC’s current review, which could again lead to refunds, changes to product disclosure, or stricter rules for lenders.

What This Means for You

If you have an offset account, you should still see real benefits — provided the account is correctly linked and the balance is applied daily against your home loan. But if something isn’t set up properly, you may not be getting the full savings you expect.

Here are the main risks ASIC is investigating:

• Mis-linked accounts – the offset account is not actually connected to the mortgage.

• System or timing errors – the bank delays applying the offset, or only applies it monthly instead of daily.

• Disclosure gaps – customers don’t always understand fees, conditions, or limitations that reduce the benefit.

  
  

What Happens Next

ASIC is reviewing eight banks and will report back once it understands the scale of the issue. If customers have been disadvantaged, refunds or compensation will be required. Banks may also have to improve the way they explain and manage offset accounts.

For borrowers, the key takeaway is not to panic but to be proactive.

What You Can Do Now

• Check your loan statements. Make sure the offset account balance is reducing the interest-bearing portion of your mortgage.

• Ask your bank or broker. If you’re unsure whether the link is working properly, ask for confirmation in writing.

• Review fees and conditions. Some offset accounts only apply partial benefits or come with package fees that outweigh the savings.

• Stay informed. As ASIC’s work continues, more guidance and possibly remediation programs may emerge.

  
  

Final Thoughts

Offset accounts can be a powerful tool when they’re working correctly, but ASIC’s probe is a timely reminder to check the details. The Australian Financial Review has highlighted that with hundreds of billions tied up in these products, the stakes are high for both banks and customers.

As your mortgage broker, my role is to help ensure your loan features — including your offset account — are set up and working in your favour. If you’d like me to review your current arrangement or explain how offset benefits are being applied to your loan, get in touch.

References

Moullakis, J. (2025) Issues in the $307b mortgage offset market spur ASIC probe. Australian Financial Review, 31 August.ASIC (2025) ASIC conducting surveillance into mortgage offset market, Mortgage Professional Australia, 1 September.9News Staff (2025) Financial watchdog scrutinising banks over concerns mortgage holders are being ripped off, 9News, 27 August.

⚠️ General Advice WarningThe information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Before acting on any information, you should consider whether it is appropriate to your circumstances and seek professional advice.