Banks charged mortgage holders $55m in extra interest after offset account errors, Asic finds
Summary
The Australian Securities and Investment Commission (ASIC) found that banks made errors with mortgage offset accounts, causing customers to pay $55 million more in interest over two years. Many borrowers were unaware their accounts were not linked correctly, leading to higher loan repayments and longer payoff times.Key Facts
- ASIC reviewed over 200,000 home loans from eight banks and found hundreds of offset account problems.
- Banks repaid $55 million to affected customers but expect the total to increase.
- Mortgage offset accounts allow borrowers to reduce interest by offsetting savings against their loan balance.
- Errors included accounts becoming unlinked without customers’ knowledge, causing extra interest charges.
- Some banks struggled to even identify if a customer had requested an offset account.
- Banks have compensated most affected customers but were slow to detect and fix problems.
- Customers often did not realize their offset accounts were not working properly, leading to paying more interest and longer loan terms.
- Industry leaders confirmed most banks managed offset accounts correctly in over 99% of cases.
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