Half of the big four banks to refund millions on home loans
HALF of Australia's big four banks have to refund millions to customers after coming forward to admit they overcharged on home loans for years.
Fresh on the heels of Westpac overcharging customers $11m after a 23-year systemic glitch in its interest only home loans, the National Australia Bank now admits it overcharged customers with mortgage offset accounts over a seven-year period.
A statement by industry regulator ASIC said NAB has refunded $1.7m to 966 home loan customers after admitting it failed to properly set up mortgage offset accounts.
"Following customer complaints, NAB conducted an internal review 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."
Acting ASIC chair Peter Kell said any errors made by banks should see "timely and appropriate action to ensure that consumers are not any worse off as a result of the mistake".
"Consumers should be confident that when they sign up for a home loan they are receiving all of the benefits that are being promoted."
NAB has begun contacting and refunding affected customers, ASIC said, and any customers with questions should contact the bank on 1800 152 015. Those being refunded including customers with offsets who have already paid off their loan before this year.
According to ASIC offset accounts were savings or transaction accounts linked to home loans which help reduce the amount of interest customers should pay on their mortgage.
"For example, if the outstanding balance on the home loan is $300,000 and there are savings of $50,000 in the offset account, then interest is only payable on the difference ($250,000)."
When NAB failed to link offset accounts to mortgages that saw consumers pay more interest than they were supposed to.
The bank has hired PwC to review its compliance systems to prevent a similar situation from happening in future.