National Australia Bank (NAB) has refunded $1.7m to 966 home loan customers after it failed to properly set up mortgage offset accounts.
Following customer complaints, NAB conducted an internal review in February 2017 which found that between April 2010 and August 2017 it had not linked some offset accounts to broker originated loans. This resulted in those customers overpaying interest on their home loan.
NAB has refunded affected customers so that they are only charged interest that would have been payable had the mortgage offset account been properly linked from the commencement of the home loan. The bank will also remediate customers who had an offset account during the relevant period but had repaid their home loan before 2017.
"Consumers should be confident that when they sign up for a home loan they are receiving all of the benefits that are being promoted," acting ASIC chair Peter Kell
"Where there are errors there should be timely and appropriate action to ensure that consumers are not any worse off as a result of the mistake."
NAB reported the issue to ASIC. NAB has also engaged PwC to review the remediation approach and to ensure NAB's compliance systems will prevent a similar error from occurring in future.
"We sincerely apologise to our customers for this, which was due to administration errors," said NAB general manager for home lending, Meg Bonighton.
The 966 customers represent 0.73% of the total number of offset accounts (approximately 178,000) established through NAB's broker channel since 2010, she added.
"NAB advised ASIC about this matter earlier this year, and, over the past 12 months, has implemented a number of measures to improve offset origination processes, and enhanced the ability for customers to review their offset arrangements themselves."