ASIC warning: your offset account might not be offsetting at all
This week I speak with ASIC Chair Sarah Court about the regulator's investigation into mortgage offset accounts and why Australians are being urged to check theirs.
Offset accounts are supposed to be one of the simplest products in banking. Put money in, link it to your home loan and pay less interest. ASIC’s latest investigation suggests you might need to open your statements and check if your offset account is in fact working like that.
This week on the podcast I sat down with the new ASIC Chair Sarah Court to unpack one of the most significant banking reports released this year. This week, ASIC have announced that they have dived deep into how offset accounts are working, and have concern that many are not working as they are supposed to.
ASIC’s investigation found banks have already paid more than $55 million in compensation over two years after offset accounts failed to reduce customers’ home loan interest as promised. Even more concerning, the regulator says the true scale of the problem may be much larger because some banks couldn’t reliably identify customers who had requested an offset account in the first place.
We talk through how offset accounts are supposed to work, why so many failures have occurred, why they’re often difficult for customers to detect, and the simple checks every mortgage holder should make - particularly if you’ve refinanced, switched loan products or come off a fixed-rate loan in recent years (and even if you haven’t).
LISTEN TO THIS EPISODE OF THE PODCAST HERE:
Highlights of the conversation:
Why an offset account only saves you money if it’s correctly linked to your mortgage.
ASIC’s investigation found banks have already paid more than $55 million in compensation to affected customers.
Around $350 billion now sits in offset accounts across Australia—and the number is growing rapidly.
The four most common ways offset accounts fail, including accounts that were never linked at all.
Why many banks struggle to even identify customers who requested an offset account years ago.
How legacy banking systems and manual processes are contributing to these mistakes.
Why it’s often surprisingly difficult for customers to confirm their offset account is actually working.
The simple checks you can do today to make sure you’re receiving the interest savings you’re expecting.
What to do if you think your offset account isn’t working correctly.
Why offset accounts can become even more valuable as you approach retirement and access to new borrowing becomes harder.
Sarah Court explains what ASIC expects banks to do next—and when consumers should escalate concerns.
Bottom line: Don’t assume your offset account is working just because you have one. Spend five minutes checking. It could save you thousands over the life of your mortgage.
Concerned, take these three steps:
Open your online banking app and look at your offset account and your home loan side by side. Check if the offset account is linked to that loan.
Check it’s linked to the right loan, particularly if you’ve refinanced, switched products or come off a fixed rate at any point. Third, pull up a recent statement and see whether the interest you’ve been charged looks like it’s calculated on your loan balances minus your offset balances, not your full loan balance alone.
If anything makes you concerned, call your bank. Ask them to confirm, in writing, by email or secure message, that the account is linked, has stayed linked, and is reducing your interest the way it’s supposed to.
If the bank can’t or won’t give you a straight answer, and you’re worried there’s an unsolved issue, you can report it directly to ASIC through its website to escalate things.
Script for calling your bank:
Here’s a little script for talking to your bank too.
Before you call: have your home loan account number and your name as it appears on the account ready.
Opening
“Hi, my name is [your name], and my home loan account number is [XXXX]. I’d like to check on my offset account, because I can’t confirm from the app whether it’s actually working.”
The questions to ask
“Can you confirm my offset account is currently linked to my home loan?”
“Can you confirm it’s linked to the correct loan? I’m asking because I’ve [refinanced / come off a fixed rate / switched products] at some point, and I want to make sure it’s still linked properly since then.”
“Has it stayed continuously linked the whole time, or was there ever a period where it came off? If so, when, and for how long?”
“Can you show me how much interest my offset account has actually saved me over the past twelve months?”
“If it turns out there was a period where it wasn’t linked properly, am I owed compensation for the extra interest I paid during that time?”
Get it in writing
“Can you send me that confirmation by email or secure message? I’d like it in writing rather than just a verbal answer.”
If they can’t answer on the spot: “That’s fine, can you log this as a formal query and give me a reference number, so I can follow it up?”
If you’re not getting anywhere
“If this isn’t resolved, I understand I can lodge a complaint with the Australian Financial Complaints Authority, which is free and independent, or report it directly to ASIC. I’d rather sort it out with you first, but I want you to know I’m aware of that option.”
That last line does some helpful work, it signals you know your rights without being aggressive about it, and banks tend to move faster once a customer mentions AFCA by name.
But frankly - you shouldn’t have to. According to Sarah Court, all the banks know about this issue and are keen to remediate issues - if they find them.
From Bec’s Desk
Hello Primetimers!
What a privelidge to have Sarah Court, the new Chair of ASIC on the show. She’s delivering a tough message to the banks, and to all of us with an offset account - so please take time to look at yours. The Moneysmart website has more information on Mortgage Offset Accounts too. And I’ll be going deeper in this weekend’s Sydney Morning Herald and The Age. Keep an eye out.
In other things this week.
The Facebook gods just keep delivering. Our Epic Retirement Club this week powered through 700,000 users. It’s the largest retirement club in the world that I know of, on or off facebook. I set up this club to help normalise modern retirement - because for so long we've treated retirement like something old people do - beige, boring and ordinary. But together we've proven that's not what people want - they want to learn, share, grow and help each other to have epic retirements. And that's exactly what The Epic Retirement Club community has become.
We've reduced the fear of retirement, normalised the problems people face, and helped people see the steps ahead of them clearly and objectively.
Most of you don’t realise that this isn’t a commercial project for me. In fact, many don't realise that this club is managed by a wonderful volunteer team of moderators, mostly part-time or retired, 20 of them from all over the world. For them I am very very grateful. And they are what makes the club magical - keeping our standards high and our quality of content even higher. If you’re participating or lurking, I hope you enjoy the warmth and the community packed with lessons. Or visit the club here if you haven’t found it yet.
As for the rest of the week - it’s all about courses! Our HESTA Epic Retirement Course has thousands of people all buzzing with excitement.
And our Epic Retirement Flagship Course is filling fast - with hundreds already book I had to add more places to our earlybird deal. That will close this weekend. Then no more 25% off deal! You can download a brochure here and book your place.
Until next week - Make your Prime Time count!
Bec Xx
