Major Australian banks failed to properly manage mortgage offset accounts in the two years through August 2025, resulting in customers unknowingly paying more interest than was due, the Australian Securities and Investments Commission (ASIC) said Wednesday following a review of the sector's offset practices.

During that period, banks paid more than AU$55 million in customer compensation for offset account failures, and further compensation is expected as the extent of the problem becomes clearer, the regulator said.

ASIC reviewed the offset practices of eight banks including Westpac Banking (ASX:WBC, NZE:WBC), ANZ Group Holdings (ASX:ANZ, NZE:ANZ), Commonwealth Bank of Australia (ASX:CBA), Macquarie Group (ASX:MQG), AMP's (ASX:AMP) AMP Bank, Credit Union Australia, HSBC Bank Australia, and ING Bank (Australia).

It found deficiencies in how all banks set up, monitored, and managed offset accounts, which are marketed as a simple way to save on mortgage interest over the life of a home loan. Banks struggled to readily identify customer offset account requests and were slow to fix issues, while their detection of failures was inconsistent.

"Some banks are not getting the basics right," ASIC Chair Sarah Court said, noting that some offset failures went undetected until the ASIC started investigating them.

The Australian Banking Association did not immediately respond to a request for comment from MT Newswires.