The 7 offset account errors that cost you interest

What did ASIC actually find?

In July 2026 the corporate regulator published REP 837 — Offsets, out of mind, a review of how eight banks — between them more than 70% of Australia's $2.5 trillion home-loan market — set up, linked and managed mortgage offset accounts. ASIC examined loan-level data for 204,000 home loans settled between March and August 2025. The context: Australians held about $349.1 billion in offset accounts as of March 2026, up 28% in two years.

Banks reported these offset failure types, as a share of the failures identified:

Reports to ASIC between 1 September 2023 and 31 August 2025 show banks paid over $55 million in compensation for offset account failures — with more expected as remediation programs continue. Manual staff errors were the main cause. One precision worth keeping: ASIC's review examined how banks set up and managed offset accounts, not how they calculated interest. The arithmetic of the benefit is a separate question — and a separate article: how offset interest is actually calculated.

From the report, the case studies, and what we see when borrowers upload their statements, the errors sort into seven.

What are the seven errors?

Error 1 — the offset account was never opened

The borrower asked for an offset — sometimes paid a package fee for it — and the account was never created. ASIC found some banks could not readily identify whether a customer had requested an offset at all: no single authoritative record, so the request lived in emails, assessor notes and call recordings. If nobody can find the request, nobody acts on it. The borrower assumes the feature exists; the bank's systems have never heard of it.

Error 2 — the account was opened but never linked

The most common failure ASIC recorded: 55% of cases. The offset account exists. The statements arrive. The balance grows. But the link between the account and the loan was never made, so interest is charged on the full loan balance every single day. In one case ASIC noted, a bank identified hundreds of unlinked accounts only after the regulator engaged — it is now paying more than $1.4 million in compensation, reviewing loans back to 2019. ASIC's own hypothetical puts a human number on it: a couple with a $750,000 loan and a $50,000 average offset balance pays more than $3,000 in extra interest in one year if the link is never made — and close to $230,000 in missed savings, plus four extra years of repayments, if it runs for the life of the loan.

Error 3 — the link went in late

The offset is linked eventually — but the benefit starts on the link date, not on settlement day and not on the day you asked. ASIC documented one bank whose process gap could delay linking by up to 21 days, and which took around two years to fix the process. Delays cluster around in-life requests: you ask for an offset on an existing loan, the request enters a manual queue, and interest keeps accruing on the full balance while it sits there. Every day of delay costs the daily benefit — on our reference loan below, $8.22 a day.

Error 4 — the offset was linked to the wrong loan

ASIC's controls analysis found some banks could not reliably detect this one at all. It happens most easily with split loans: the mortgage is split into two accounts — say one fixed, one variable — and the offset is attached to the wrong split, or to a loan since closed. ABC News told the story of Brooke, a Brisbane borrower whose offset was initially linked to the wrong loan account after her mortgage was split; for about two years her savings reduced nothing. The error surfaced only when she went to close the accounts while refinancing. The bank offered more than $5,000 in compensation.

Error 5 — a loan change quietly delinked it

The link is not permanent. ASIC found that certain in-life changes — refinancing, switching products, moving between variable and fixed rates — typically delink an existing offset account, and restoring the benefit usually requires a new request from the customer. Brooke's story had this second act: when part of her loan was fixed, the link fell off, with no notice from the bank. ASIC found complaint records full of customers who did not know a separate re-linking request was needed — and one bank whose systems simply could not carry an existing offset across an internal refinance. Repayments stay the same throughout, so nothing looks wrong.

Error 6 — linked, but the interest never came down

The subtlest failure on ASIC's list: the offset account is linked, but interest is not reduced as expected. A link is a database flag; the benefit is arithmetic. The flag can be set while the calculation ignores the balance — wrong offset percentage, wrong loan in a multi-split structure, a product that caps how much of the balance counts. This is why "the app says it's linked" is not the end of the check. It is the beginning.

Error 7 — the money was in the wrong account

The only error on this list the borrower makes unassisted. The offset works; your salary and savings just don't land in it. Common versions: two everyday accounts, and the pay goes to the unlinked one; a separate "high-interest" savings account holding what should be offsetting the loan; or a product assumption that was never true — a partial offset treated as 100%, a balance cap, a fixed-rate split with no offset eligibility at all. Money in an unlinked account earns savings interest (taxed) instead of avoiding loan interest (not taxed) — at a 6.00% loan rate, the offset is usually worth more, and the difference compounds.

Seven errors, one pattern: the benefit is quiet, the repayment doesn't move, and nothing on a monthly statement announces the failure. The error behind all seven — the one that turns a 21-day delay into a two-year loss — is never checking. ASIC's chair put it plainly: in some cases, offset failures went undetected until the regulator started asking questions.

What does a broken link actually cost?

The same reference loan as our worked example — hypothetical, chosen so you can reproduce every figure:

Every error above bills at that daily rate for as long as it runs:

Two things make these figures conservative. First, they hold the offset balance still; a balance that grows with each pay cycle loses more. Second, the harm compounds: your repayment stays the same whether or not the offset works, so every dollar of unnecessary interest is a dollar that didn't come off the principal — you carry a higher balance into next month, and it charges you interest too. That is how a $3,000-a-year failure becomes ASIC's life-of-loan figure of close to $230,000 and four extra years of repayments.

How do you check the link yourself?

Five steps. The first four take minutes; the fifth is the one that pays.

1. Look in the app. Many banks show a linked offset on the loan screen — but ASIC found some banks don't show link status at all, some don't show which loan the offset is linked to, and half didn't show the interest saved. Absence of evidence here is not evidence of absence; go to step 2.
2. Ask in writing. Three questions: is an offset account linked to my loan; which loan account is it linked to; from what date? The date matters — late linking is its own error.
3. Re-check after every change. Refinance, product switch, fixed-rate roll, loan split: assume the link was severed until confirmed otherwise. Re-linking usually needs a fresh request.
4. Confirm the money goes to the offset. Salary, savings, surplus — into the linked account, not the account that merely feels like the offset.
5. Do the arithmetic. The only test that settles it. Take last month's interest charge and reverse it into the balance you were actually charged on:

If the implied balance lands near your full loan balance when it should land near loan-minus-offset, the benefit is not being applied — whatever the link status says. (The cents left over are the rounding differences we covered here.) One month is enough to catch a broken link; a pattern across months is what an audit looks for.

What do you do if the numbers don't match?

Put it to the bank in writing: the link status, the link date, and a request that interest be re-calculated from the date the offset should have been operating. ASIC's stated expectation is that banks identify offset failures, fix them and compensate affected customers — the $55 million already paid shows the mechanism works when it is used. Keep every statement; they are the evidence. If the bank's answer doesn't hold up, the next stop is a complaint to the Australian Financial Complaints Authority — free, and independent of the bank.

Or skip the manual work: run the check. Upload your loan and offset statements and we re-calculate every day of the period — link gaps, late links, wrong-loan links included — line by line, to the cent, with the working shown. New to all of this? Start with what an offset account is, exactly, or read what the regulator found.

Frequently asked questions