Asic\u2019s review of more than 200,000 home loans from eight banks unearthed poor practices by lenders.<\/p>\n
In one case, a bank accidentally unlinked a customer\u2019s offset account when processing a change to their mortgage. That went undetected until the customer noticed their higher repayments and complained.<\/p>\n
In just one month, the customer had paid more than $3,500 in additional interest \u201cas a direct result of the offset account not being linked\u201d, the report found.<\/p>\n
Some banks couldn\u2019t readily identify whether the customer had even requested an offset account \u2013 a finding which suggested the problem could be even more widespread than initially thought.<\/p>\n
Sarah Court, the Asic chair, said \u201csome banks are not getting the basics right\u201d.<\/p>\n
\u201cWhen offset accounts don\u2019t operate correctly, the harm can be hidden. Loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan.\u201d<\/p>\n
That represented a double blow to customers who lose the promised interest savings, but also the opportunity to have used that money elsewhere, Court said.<\/p>\n
Of the 204,000 home loans, Asic found issues with hundreds of mortgage offset accounts. Simon Birmingham, the CEO of the Australian Banking Association, said this meant that \u201cin more than 99% of cases banks were found to manage them correctly\u201d.<\/p>\n
\u201cAs the report states, banks have already taken action to compensate the small number of customers where those banks identified errors, often manual errors,\u201d Birmingham said.<\/p>\n
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