Is Your Offset Account Actually Working? ASIC Says Banks Failed Thousands of Borrowers. Here Is How to Check Yours.

Is Your Offset Account Actually Working? ASIC Says Banks Failed Thousands of Borrowers. Here Is How to Check Yours.

The regulator just said the quiet part out loud. In a review released today, ASIC found that banks have been failing to set up and link mortgage offset accounts properly, quietly costing Australians interest savings they were promised, with more than $55 million in compensation already paid to affected customers over two years. The failures are mundane and brutal: in over half the cases the offset account was opened but never linked to the loan, so the money sat there doing nothing while interest was charged on the full balance. As ASIC Chair Sarah Court put it, customers are doubly hit, losing the promised savings and the use of the money elsewhere. The worst part is that the harm is invisible: your repayment does not change, your statement looks normal, and the only way to know is to check the arithmetic yourself. So here is the arithmetic. This article explains exactly what ASIC found, gives you a free calculator that estimates whether your offset is actually reducing your interest, and tells you what your monthly interest should look like when it works. Written by former bankers who have read a few thousand loan statements from the inside. The companion strategy: our same-repayment calculator shows how a held repayment at a lower rate cuts years off the loan entirely. And to price the rate side of the same review, our refinance savings calculator runs your gap over 1 to 30 years. And with census night making the whole country look at its repayment, our piece on the mortgage question worth checking first pairs well with this one. And once the offset is verified, the bigger lever is the rate itself: here is how to negotiate your own rate cut in a year with no RBA cuts coming.

What ASIC actually found

The review, published as REP 837, Offsets, out of mind, is unusually blunt for a regulator. ASIC examined how eight banks set up, linked and managed mortgage offset accounts, drilling into loan-level data for 204,000 home loans. What it found was not one rogue process but a pattern:

Source: ASIC media release 26-173MR and REP 837. General information only.

Alongside the failure counts, ASIC flagged four systemic concerns: banks struggled to identify customers’ offset requests, detected failures inconsistently, were slow to compensate, and gave customers limited visibility into their own offset arrangements. Over $55 million in compensation has been paid for failures between September 2023 and August 2025, and ASIC’s instruction to the industry is unambiguous: find every affected customer and pay them back.

Step back and the scale explains the stakes. Australians hold $349.1 billion in offset accounts, up 28 per cent in two years, against 3.3 million mortgaged households. At current interest rates, every $100,000 sitting in a correctly linked offset saves thousands of dollars of interest a year. The same $100,000 in an unlinked offset saves exactly nothing, and, as ASIC noted, nothing about your repayment tells you which one you have. If you want the mechanics of how offsets are meant to work, our offset account explainer covers the foundations; the rest of this article is about verifying yours. Timing note: the RBA meets on 11 August, which makes this exactly the week to know your numbers.

The back-of-envelope check, explained

A version of this check has been passed around by sharp-eyed borrowers all week, and the logic is sound, because it is the same arithmetic your bank runs every night. Interest on a home loan is calculated daily on the balance after offset, so last month’s interest charge is a fingerprint of the balance you were really charged on. Reverse-engineer it in three steps:

• Step 1: annualise the interest. Take last month’s interest charge from your statement, multiply by 365, divide by the number of days in that month.
• Step 2: divide by your rate. Divide the result by your interest rate as a decimal (6.0 per cent becomes 0.06). This gives the implied balance, the balance the bank actually charged you interest on.
• Step 3: compare. Your implied balance should sit close to loan balance minus offset balance. If instead it sits near your full loan balance, your offset may not be doing anything, which is exactly the failure ASIC found in more than half its cases.

Worked example: interest last month was $3,000 in a 30-day month. $3,000 × 365 ÷ 30 = $36,500 of annualised interest. At a 6.0 per cent rate, $36,500 ÷ 0.06 = an implied balance of about $608,000. If your loan is $700,000 and your offset holds $90,000, expected is $610,000: the numbers line up, the offset is working. If the implied balance had come back near $700,000, that would be the red flag.

Small gaps are normal and are not evidence of a problem: your balances move daily, repayments land mid-month, and rate changes part-way through a month all shift the figure by a little. What you are looking for is not a few thousand dollars of drift; it is an implied balance that looks like your offset does not exist. The calculator below runs all of this for you, and also tells you what your monthly interest should look like when the offset works.

The calculator: is your offset working?

Three practical notes on using it. Pull the interest charged figure from your latest statement or transaction history, not the repayment amount, which mixes principal and interest. Use the rate your loan is actually on now, from the same statement or your banking app. And if your balance or offset moved a lot during the month, big deposits, a tax refund landing, a renovation drawdown, run it again next month before drawing conclusions: one clean month tells you more than one messy one.

If the numbers do not line up

If the calculator shows a significant gap, do not panic and do not assume malice; assume the boring failure ASIC documented, and work the process. Ask your lender in writing to confirm the offset account is linked to the loan, the date it was linked, and the balance used for interest calculation. If it was not linked, or linked late, ASIC’s position is that banks must identify, fix and compensate, and more than $55 million has already flowed back to customers on precisely this issue. Keep your statements; the paper trail is your friend.

And then ask the bigger question, because an unlinked offset is rarely the only thing wrong with a loan nobody has looked at in years. The same neglect that leaves an offset unlinked leaves a rate drifting to the expensive side of the market, the wrong structure in place, and features you pay for but never use, the pattern we unpack in our home loan self-audit and our plain-English guide to refinancing. A free review with us checks all of it at once: offset linkage, rate against the current market across 40+ lenders, and structure, and if your loan stands up, we will tell you that too. If you are coming off a fixed rate, the check is doubly worth doing before the rollover locks anything in.

The bigger version of the same problem: business and commercial loans

Here is the part of this story nobody else will write. ASIC’s review covered home loans, because that is where the regulator looked. But ask anyone who has worked inside a bank, and we have, where loan features are least likely to be set up and maintained properly, and the answer is business and commercial lending. Offset-style facilities against commercial loans, redraw arrangements, business transaction accounts that were supposed to sweep against debt: the same linkage failures occur, with larger balances, and with owners far too busy to reverse-engineer an interest charge.

The check is the same arithmetic. Pull the last interest charge on your commercial property loan or business facility, annualise it, divide by your rate, and see whether the balance the bank charged you on matches the balance you think you owe. While you are holding the statement, look at the rate too: commercial pricing drifts worse than residential because it is reviewed less, and refinancing business debt no longer even requires the paperwork ordeal it used to, as our no-tax-returns business refinance piece explains. We arrange home, commercial and business lending under one roof, which means one review covers the lot.

Who should run this check hardest

The borrowers most exposed to this failure share two traits: meaningful money in the offset, and no time to audit a bank. That describes an awful lot of the professionals we arrange lending for. Shift workers stacking overtime into an offset between rosters, the nurses whose pay rises we covered this month and the teachers whose waiver expanded, and doctors carrying large loans at high LVRs where every basis point of wasted interest compounds hardest. If your profession earned you a lending advantage on the way in, it deserves a working offset on the way through, and the check takes one statement.

Two groups get a specific nudge. Loans settled between 2023 and 2025: that is the exact window ASIC examined, where the failure rates were measured. And anyone who refinanced recently: relinking the offset is a step that gets missed in the shuffle between lenders more often than anyone admits. New loan, new bank, old assumption; run the check.

Property investors get a nudge of their own. Holding cash in the offset rather than paying down deductible debt is a structure many investors run deliberately with their accountant, and it only works if the offset is actually linked, which makes this failure doubly expensive on an investment loan. While the statement is out, check the rate too: investment loan pricing drifts as badly as any, and our guide to refinancing an investment property loan covers when a switch pays.

Frequently asked questions

How do I know if my offset account is actually linked to my loan?

Two ways: ask your lender to confirm the linkage and its start date in writing, and verify the arithmetic yourself using last month’s interest charge, annualised and divided by your rate, which reveals the balance you were actually charged on. If that implied balance sits near your full loan balance rather than the balance net of offset, the offset may not be operating, which was the most common failure in ASIC’s 2026 review.

What did ASIC find about offset accounts?

ASIC’s REP 837, released 29 July 2026, reviewed eight banks covering over 70 per cent of the home loan market and examined 204,000 loans. Among the failures identified, 55 per cent involved offset accounts opened but never linked, 22 per cent never opened, and 14 per cent linked late, with more than $55 million in compensation paid for failures across two years and banks criticised for weak detection and slow remediation.

How much interest should I pay each month with an offset?

Roughly your loan balance minus your offset balance, multiplied by your annual rate, divided by 365, times the days in the month. On a $700,000 loan with $90,000 offset at 6 per cent, that is about $610,000 × 0.06 ÷ 365 × 30, or roughly $3,000 for a 30-day month. The calculator above runs this for your numbers; actual charges vary with daily balances and rate changes.

My calculator result shows a small gap. Should I worry?

Usually not. Daily balance movements, the timing of repayments and deposits, mid-month rate changes and statement rounding all create gaps of a few per cent in either direction, which is normal. The red flag is a large gap, especially an implied balance that looks like your offset does not exist at all. In that case, query your lender in writing and ask for linkage confirmation and, if warranted, remediation.

Am I owed compensation if my offset was not linked?

If your offset was not set up or linked as promised, ASIC’s clear expectation is that banks identify affected customers, fix the failure and pay appropriate compensation, and more than $55 million has already been paid. Start by requesting written confirmation of your offset’s linkage history, and escalate through your lender’s complaints process and then AFCA if the answer is unsatisfactory. This is general information, not legal advice.

Does this apply to business and commercial loans too?

ASIC’s review covered home loans, but offset-style and redraw facilities on business and commercial lending are prone to the same setup failures and receive even less scrutiny. The same annualise-and-divide check works on any facility with a stated rate and a monthly interest charge, and commercial loan pricing drifts enough between reviews that checking the rate at the same time is usually worth more than the offset check itself.

Is the calculator’s result financial advice?

No. It is a general arithmetic estimate based only on the numbers you enter, calculated in your browser and not stored or sent anywhere. It cannot see your actual loan terms, fee structure or daily balances, and it is not credit or financial advice. Treat a large gap as a prompt to query your lender or have your loan reviewed properly, not as proof of an error.

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