Australian homeowners are being urged to check their mortgage offset accounts after banks were found to have wrongly charged customers millions of dollars in extra interest.

The Australian Securities and Investments Commission, or ASIC, found that lenders had repaid around 55 million dollars to customers over the past two years following problems with offset accounts.

The review examined more than 200,000 home loans across eight banks and uncovered cases where offset accounts were incorrectly linked, unlinked, or poorly managed.

Mortgage offset accounts are designed to reduce the amount of interest borrowers pay by offsetting their savings against their home loan balance.

ASIC warned that when these accounts fail to operate correctly, customers can unknowingly pay more interest and take longer to repay their mortgages.

Homeowners are now being advised to check their loan statements and confirm with their banks that their offset accounts are correctly linked and functioning as intended.

The regulator says further repayments could be required as more errors are identified, while borrowers affected by the mistakes may be entitled to compensation. (The Guardian)

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