ASIC finds mortgage borrowers miss out on millions in offset interest savings | The Business

Millions of Australians use mortgage offset accounts to reduce interest costs on their home loans, but the corporate regulator says some banks are not delivering the savings as promised.
An offset account is a separate transaction account linked to an eligible home loan.
The money remains available for the customer to spend, just like a normal transaction account, but the balance reduces the amount of the mortgage on which the bank calculates interest.

ASIC found Australian banks paid more than $55 million in compensation to customers in just two years, for failures with mortgage offset accounts.

The watchdog examined eight banks representing more than 70 per cent of Australia’s home loan market and found weaknesses across all of them in how offset accounts were set up, monitored and managed.

The review covered AMP, ANZ, CBA or Commonwealth Bank, Credit Union Australia, HSBC, ING, Macquarie and Westpac.

The regulator said several banks have begun remediation and it will monitor their fixes, provide individual feedback and consider further regulatory action.

Simon Birmingham from the Australian Banking Association says the system is working as it should.
He said in the very small number of cases where issues have been identified, banks are resolving those issues, compensating customers, and improving systems.

Canstar’s Sally Tindall says there are ways you can check if your mortgage offset account is working for you.

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