Bank admits overcharging offset account holders

MyState Bank has refunded more than $230,000 in over-charged interest and fees to about 1,040 customers with mortgage offset accounts.

ASIC said the refunds occurred after a MyState review of customer accounts found that some borrowers:

• Did not have their offset accounts linked to their mortgages – meaning they were over-charged interest
• Were charged offset account fees after their loan had been discharged or changed to a kind that could not be linked to an offset account

MyState reported itself to the regulator

The breach was detected when one of the Tasmanian lender’s customers enquired about their accounts being linked, according to ASIC.

“MyState conducted a review of accounts set up in a similar manner. MyState found customers with loans and unlinked offset accounts, customers with offset accounts but no loans, and customers with offset accounts together with ineligible loan products,” it said.

“The matter was reported to ASIC by MyState. MyState has worked with ASIC to refund customers and improve its internal processes, including by ensuring employees have appropriate account administration training.”

Steps that concerned customers can take

ASIC deputy chair Peter Kell said banks need to ensure products deliver the benefits they promote.

“This is another example of a single customer complaint revealing a systemic issue, and we are pleased that MyState has taken the appropriate action in response,” he said.

Customers who have questions about their MyState accounts can contact the bank on 138 001.

ASIC’s MoneySmart website has information to help consumers make a complaint about financial products and services, including sample emails and letters.

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