A recent investigation revealed that the National Australia Bank (NAB) may have been overcharging some home loan customers for up to seven years.
Following customer complaints, NAB conducted an internal review that 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.
An offset account is a savings or transaction account that is linked to a home loan account. Any money in the offset account reduces the amount of interest payable on the linked home loan. 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).
In this case, NAB failed to link some offset accounts to home loan accounts, which meant that money held in those offset accounts did not reduce the interest payable on the home loan accounts. As a result, consumers paid more in interest than was required.
NAB has commenced contacting and refunding affected customers, with $1.7 million allocated to 966 victims so far.
“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 Australian Securities and Investments Commission (ASIC) Chair Peter Kell said.
“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 has taken steps to prevent a similar error from occurring in the future.
NAB customers who want to check if they have been overcharged interest on their home loan accounts can call the bank on 1800 152 015.
NAB will also remediate customers who had an offset account during the relevant period but had repaid their home loan before 2017.
Are you one of the victims of NAB’s home loan mistake? Have you received your compensation yet? Do you expect more mistakes to be discovered by the banking royal commission?