ASIC’s review of offset account failures found more than $55 million paid out for bank errors, but it didn’t look at fraud at all. Our submission to the Senate Economics References Committee sets out six fixes, including interest freezes while fraud is investigated.
Make it stand out
Home mortgages are a lucrative profit centre1 for Australian banks - and an equally lucrative target for property-related fraud and cyber-enabled scams2 which are becoming more sophisticated3, as the UK has documented4. Our charity has worked directly with 16 Australian homebuyers whose settlement funds were stolen through payment redirection fraud, with losses of $48,925 to $749,637 between 2023 and 2025. Many had money stolen from the mortgage and offset accounts their lender opened with their home loan. In addition, three HSBC customers, who were supposed to be remediated after the ASIC v HSBC Federal Court5 action delivered a $35m fine for ASIC, still face delays and under-compensation at the Australian Financial Complaints Authority (AFCA). Another SVA community member was trying to buy an investment property and after paying her $69,000 deposit, became targeted for a Chinese police threat scam6 which stole $1.47m – she lost the property she was trying to purchase and all of the wealth and productivity attached to her principal place of residence, which is now mortgaged to Westpac but has been transferred to Hong Kong-based crime networks. As a retiree, she will now use her superannuation to pay back Westpac. This submission outlines:
Home owners' life savings sit in mortgage offset accounts and are targets for fraud. ASIC’s Report 837 examined bank errors in linking offset accounts. As ASIC published this report, AUSTRAC’s Operation Claw issued a media release urging “every mortgage lender in Australia to examine their mortgage books for signs of fraud” and “implement strong controls to shut this behaviour out of the Australian economy” after uncovering hundreds of millions of dollars of mortgage fraud across Australian banks, detailed in Treasury FOI disclosure 4410.
Banks charge interest on stolen mortgage offset balances. Two of our community members who took out mortgages with CBA and NAB continue to pay interest on settlement money taken by criminally fraudulent schemes, with no remediation of that interest. HSBC victims also remain under-compensated7 for their scammed mortgage losses during 2022-24, despite ASIC issuing a $35m fine and Federal Court action that seemingly ordered customer redress. Ongoing financial harm from mortgage-related frauds happens to everyday Australians.
Big 4 bank’s lending arms are incentivised to write higher loans yet remain separate from the bank’s fraud controls. This is a governance and internal control failure that simple regulatory controls and a “Safe Systems” approach could fix.
1. The gap in ASIC’s review (terms of reference (b), (d) and (h))
ASIC found weaknesses at all eight banks’ offset accounts it reviewed: more than $55 million paid in compensation over two years, manual staff errors behind 86% of reported failures, and 77% of failures undetected.8 ASIC defines an offset account failure as any situation where a customer does not receive the interest reduction their offset was meant to deliver. Its review did not consider fraud or scams, did not assess how banks charge interest, and did not include NAB, one of this country’s largest banks.
Australians held $349.1 billion in offset accounts in March 2026. Canstar noted at the report’s release that these large balances make offset accounts an attractive target for scammers9. The NSW Crime Commission has noted the use of mortgage fraud by serious organised crime networks10. For homebuyers the offset balance can be a huge fraud target in the days before settlement, which is exactly when payment redirection fraud - which increased by 67% during 202411 - strikes. AUSTRAC12 has already identified mortgage weaknesses “could be exploited by criminals seeking to abuse Australia’s financial system”.
2. Commonwealth Bank and mortgage fraud
A first home buyer and CBA customer of twelve years took out a CBA First Home Guarantee loan in 2024. Documents CBA later released to him and evidence tendered to criminal courts showed the following:
25 June 2024: CBA converts a “Dollarmites” CBA savings account into an account holding his settlement funds to be transferred to the real PEXA (which becomes a CBA offset account prior to settlement)8 July 2024CBA’s own settlement statement showed PEXA needed only $137.39 but fraudsters misdirected payment to a fake PEXA account on ANZ platforms (even though settlement funds were already in the right account CBA ‘offset account’ for transfer to the real PEXA). CBA part-owns the real PEXA, which handles 90%+ of real estate conveyancing in Australia.
9 July 2024: A forged PEXA form arrives from the homebuyer’s solicitor’s genuine email thread within 40-minutes of calling his solicitor to check payment details for settlement. Two days before settlement, $109,350 leaves his newly established offset account for an ANZ account fraudulently named “PEXA”. Evidence later tendered to Broadmeadows magistrates court showed the ANZ receiving account named PEXA transferred the money to another ANZ business bank account held by the money mule charged with ‘negligently dealing with the proceeds of crime’ which laundered the money onshore in Melbourne through:
$93,373.75 to buy ‘travel money’ from an EFTPOS transfer to a Malvern store, Coburg Currency Exchange, Crow Currency Elise, Hay Ha Money
Approximately $8,000 to Royal Perfumes Roxburgh Park, LVMH Perfumes and Mecca with $792 to Chanel Australia
$2000 cash withdrawn at Westpac ATMs and $3,500 transfers to another personal bank account
12 July 2024: CBA’s lending team text the homebuyer on settlement day to ask where settlement funds for the real PEXA are - the CBA customer borrows $85,000 from a friend within two hours to prevent losing his $33,000 property deposit. ANZ recovered just $626 from scammer two months later.April 2025AFCA finds in favour of CBA and allows it to keep charging interest on the fraudulent payment amount13 - it rules all complaints against ANZ “out of jurisdiction”. Customer bears the full loss plus interest on a crime committed on the platform of Australia’s largest home lender, who has also reported $1b of mortgage application fraud14 to NSW Police and AUSTRAC.October 2026The mule claims he knew nothing of the broader fraud scheme and was trying to return the $109,350 to someone who had called him from an unknown number on WhatsApp. The mule is the director of two ASIC-registered companies, Jet Luxe and Riluk IP, both of which impersonate international companies. ASIC and AUSTRAC should work together to red flag registered companies in Australia impersonating other international companies.
Another Commonwealth Bank mule received $750,000 of stolen property funds into her account. Court records show CBA customer Nicola Harrington15 not only paid her rent from the stolen property money but also made two large payments to foreign nationals who the court was told had opened CBA bank accounts and then received $45,000 and $49,000 payments for “cars”. A different Commonwealth Bank mule named Mark Freeman received $250,000 into his account and was given 150 hours community service with no conviction recorded. His victims16 are still $97,000 out of pocket, which a different bank profits by charging interest on. These are real people paying ongoing costs for being victimised by criminals using Australian mortgage accounts and money transfer systems.
3. Another fraud victim charged interest through National Australia Bank
Another first homebuyer saved to purchase an apartment with a NAB mortgage17 expected to be less than $75,000. After an email from his solicitor’s thread changed the payment details, he went into the same NAB branch that approved his mortgage, where a teller advised him to pay in time for settlement. He paid $282,253 to a CBA account that NSW Police later linked to a business email compromise group18. To complete his purchase, the first homebuyer had to borrow far more than planned, including bridging finance, and NAB charged around $1,800 a month in interest while his dispute ran. AFCA eventually awarded him $206,877, about 73% of his loss, but the interest and bridging costs were never considered.19 NAB, his lender, was outside ASIC’s offset account review. NAB has also sacked staff20 connected to the ‘Penthouse Syndicate’ connected to $150 million of fraudulent mortgages and car loans.
4. Scammers target Australians with an HSBC mortgage
HSBC scammers stole from more than 1,000 Australians, some of which were targeted for their redraw, offset, and/or line-of-credit facilities attached to their home loan. HSBC itself admitted in the Statement of Agreed Facts21 that victims were charged extra interest after money was stolen from loan and mortgage accounts, and that some could not pay down debt that kept growing. Remediation under ASIC Reg Guide 277 and through AFCA has treated mortgage holders badly. Mr B lost $49,900 of extra home loan repayments, and HSBC told AFCA it was "unsure what he is seeking interest on” when he demanded reimbursement on the interest portion of his scam. AFCA admitted it had "no firm approach" to fraud settlements and steered him towards a lowball settlement. Yet in Mr T's determination22, AFCA ordered HSBC to pay the lost offset interest. Identical harm got opposite outcomes, depending on who managed the case at AFCA. Victims kept paying interest on stolen home loan money while their complaints sat open. HSBC's July 2026 "reassessment" letters then paid token interest on earlier payouts and $0 in remaining principal, with no reconciliation against actual loan ledgers. ASIC's RG 277 requires remediation to restore people to where they would have been. In effect, families paid HSBC interest on HSBC's own scam control failures. International scam networks then disseminated disinformation about HSBC scam victims23 to scam new victims.
5. Remediation & home ownership (terms of reference (e), (f) and (g))
Banks remediated $55 million of offset failures caused by staff errors but when the failure relates to fraud, the borrower carries the full cost, which banks profit from as it compounds over the loan’s life.
MemberDefraudedUnreimbursedCost of stolen money over a 30-year loan24CBA fraud victim$109,350$108,724About $245,000 repaid, including about $136,000 in interestNAB fraud victim$282,253$75,376About $169,000 repaid, including about $93,000 in interestHSBC fraud victim$49,900$7,400About $3,500 in interest already charged and never remediated, plus about $3,600 in additional future repayments. We are hoping AFCA will remediate this in due course, given the Federal Court outcome
These figures do not include money borrowed from family, legal costs, or the reduced ability to refinance that REP 837 itself identifies because of a higher loan balance. These victims will have to find thousands of dollars to instigate civil legal action in the courts if they want redress. If any settlement is mediated, the big 4 banks (except for Westpac) will force victims to sign binding deeds. When victims do not agree, the bank continues to force them through the courts and threatens them with having to pay the bank’s legal costs if they do not settle under the bank’s terms.
6. How faulty mortgage offset problems might be addressed
Recommend appropriate account structures to prevent property funds being stolen by international and local crime networks Where a bank is both lender and payer, offset balances earmarked for settlement should be flagged, and a large payment to a new payee should be checked with home loan teams AND fraud teams and never processed through OSKO. All banks must be able to provide written contracts and signed documentation of loans in plain English (similar to retirement village contracts) not just digital authorisation trails.
Place interest freezes on any loan balance attributable to a reported criminal fraud during internal dispute resolution (IDR) and external dispute resolution (EDR) through the Australian Financial Complaints Authority (AFCA) AND an open police investigation - to be refunded if the bank is later found wholly or partly liable. This freeze could be verified by a Scam Commissioner or Advisory Board to prevent criminals exploiting this further.
Block payees impersonating settlement platforms. A domestic OSKO transfer to an account named “PEXA” or another eConveyancing operator like Sympli should be held, because those operators do not receive buyers’ funds through bank transfers. Confirmation of Payee controls are failing to prevent homebuyer frauds as crime networks create ASIC-registered companies with similar-sounding names to evade namecheck controls. AUSTRAC, ASIC and ACCC must be sharing appropriate information for scam fund recovery to happen within 24 hours, not months.
Treat fraud-induced loss of offset benefits as a remediation failure that banks must report and reimburse under ASIC’s reg guide 277. Urge AFCA to weigh interest payments as consequential loss in External Dispute Resolution frameworks under the new Scam Prevention Framework.
Ask ASIC to extend its offset review to consider fraud and scam related losses (particularly for NAB and HSBC), and to publish results bank by bank to give future home loan applicants real choice in finding a high-quality home loan provider with human-centric and safe systems that will prevent customers being exploited or scammed when taking out a home loan or buying a property.
Invite NAB and HSBC and CBA to give evidence and ask each bank how many customers lost settlement funds from offset accounts connected to a scam report to Report Cyber or AFCA since 2023 (when payment misdirection fraud escalated) and how much interest it has charged on those balances versus remediated or corrected. The placement and layering of stolen mortgage funds through gold bullion, foreign currency transfers and mule accounts opened by foreign nationals or synthetic identities between 2023 and 2026 would also be worth investigating.
Mortgage customers in Australia have no choice but to rely on their banks and regulators to protect their money. Senator Andrew Bragg told the Senate the banks’ approach to mortgage offset accounts was an “inertia tax”.25 For our community, a mortgage offset account is an unlocked door that can leave them exposed to fraud, a risk that is increasing as frontier AI models scale harm26. While money mules who receive stolen mortgage funds into their bank accounts are given due process before the criminal courts27 - often with taxpayer-funded Legal Aid - mortgage customers are afforded no such equality before the courts or the Australian Financial Complaints Authority, with reimbursement unavailable. Banks will routinely out-spend individual fraud victims taking civil action to recover large fraud losses. SVA would welcome the opportunity to give further evidence to the Committee, should it be considered appropriate.
References
The Australia Institute: Profit in home lending, April 2026 https://australiainstitute.org.au/report/profit-in-home-lending-april-2026-edition/↩
Nikolovski, Zac. “No-Click Spyware Enabler ‘Served Ads on Australian Media Networks.’” Mumbrella, October 16, 2026. https://mumbrella.com.au/no-click-spyware-enabler-served-ads-on-australian-media-networks-941235.↩
PEXA Australia. “Property Settlement Scam Awareness, Behaviours and Attitudes in Australia, 2026 - PEXA.”. https://www.pexa.com.au/content-hub/settlement-scams-index/.↩
Feddon, Lynne, and Head of Counter Fraud. The True Picture of Property Fraud in England and Wales – HM Land Registry. September 17, 2025. https://hmlandregistry.blog.gov.uk/2025/09/17/the-true-picture-of-property-fraud-in-england-and-wales/.↩
Federal Court of Australia “ASIC v HSBC Bank Australia Limited.” Text. Federal Court of Australia, June 19, 2026. https://www.fedcourt.gov.au/services/access-to-files-and-transcripts/online-files/asic-v-hsbc.↩
ABC News. “The Fake Police Scam Stealing Millions from Australia’s Chinese Community.” June 5, 2026. https://www.abc.net.au/news/2026-06-06/chinese-police-scam-banks-savings-scammers-fake-documents/106731990.↩
Scam Victim Alliance. “Scam Victim Alliance Calls on AFCA to Address Victim Under-Compensation.” June, 2026. https://scamvictimalliance.org.au/submissions-blog-updates/hsbc-afca-action.↩
ASIC, Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises, July 2026. https://download.asic.gov.au/media/piwpapu5/rep837-published-29-july-2026.pdf↩
AAP, “Bank errors costing homebuyers millions in overcharges”, July 2026 (comments of Canstar’s Sally Tindall). https://aapnews.aap.com.au/news/bank-errors-costing-homebuyers-millions-in-overcharges↩
“NSW Crime Commission 2024-2025 State of Crime Reporthttps://www.crimecommission.nsw.gov.au/publications/annual-report/nsw-crime-commission-2024-2025-state-of-crime-report.pdf.↩
NASC, Targeting scams https://www.scamwatch.gov.au/system/files/targeting-scams-report-2024.pdf↩
AUSTRAC major mortgage fraud risks https://www.austrac.gov.au/news-and-media/article/major-mortgage-fraud-risks-uncovered↩
AFCA Determination 12-24-116745 (CBA). https://my.afca.org.au/searchpublisheddecisions/kb-article/?id=fce4a798-882f-f011-8c4e-000d3a6b1395↩
Treasury FOI disclosure log https://treasury.gov.au/sites/default/files/2026-08/foi-4410.pdf↩
“Melbourne Stripper’s Desperate Bid to Hide Gold Bullion Spending Spree after Couple Lost $750,000 Retirement Nest Egg in Cruel Scam: The Details That Emerged as She Sobbed Outside Court | Daily Mail Online.” Accessed October 28, 2026. https://www.dailymail.com/news/article-16192413/nicola-harrington-stripper-gold-bullion-scam-retirees-melbourne-court.html.↩
Bek Day. “Email Exposes Australia’s $2 Billion Scam Industry.” Costs. News.Com.Au, July 22, 2026. https://www.news.com.au/finance/money/costs/email-exposes-australias-2-billion-scam-industry/news-story/7da17b408d3666de7c917fa085c7ebde.↩
ABC News. “First Homebuyer Loses $280K in Scam despite Asking Bank Staff to Check Transaction Was Legitimate.” September 12, 2024. https://www.abc.net.au/news/2024-09-12/banks-telcos-social-media-fines-scams-code/104346234.↩
News, Mirage. “Sixth Arrest in Multi-Million-Dollar Cyber Fraud Case.” Mirage News. Accessed October 29, 2026. https://www.miragenews.com/sixth-arrest-in-multi-million-dollar-cyber-1268949/.↩
AFCA Determination 12-00-1061026 (NAB). https://my.afca.org.au/searchpublisheddecisions/kb-article/?id=8894dc11-27c4-f011-bbd3-7ced8da1919d↩
Joyce Moullakis. “NAB Dismisses Staff Tied to Nefarious Activities. Will Others Follow?” Australian Financial Review, May 8, 2026. https://www.afr.com/companies/financial-services/nab-dismisses-staff-tied-to-nefarious-activities-will-others-follow-20260507-p5zujo.↩
ASIC v HSBC https://www.fedcourt.gov.au/__data/assets/pdf_file/0010/597016/2026-05-22_Supplementary-Statement-of-Agreed-Facts.pdf and https://www.fedcourt.gov.au/__data/assets/pdf_file/0009/597015/2026-05-22_Statement-of-Agreed-Facts-Liability.pdf↩
AFCA Determination 12-00-1016692 (HSBC) https://my.afca.org.au/searchpublisheddecisions/kb-article/?id=f9f8941f-7379-ef11-ac20-000d3a6acbb4↩
Sharples, Sarah. “Australian Scam Victim Disgusted as Face Stolen for AI Fraud on Facebook Ads.” Internet. News.Com.Au, October 27, 2026. https://www.news.com.au/technology/online/internet/australian-scam-victim-disgusted-as-face-stolen-for-ai-fraud-on-facebook-ads/news-story/7f6cb370765ef01ef09df7addec03287.↩
SVA calculation. Assumes the unrecovered amount is carried on a 30-year principal-and-interest home loan at 6.35% a year, the rate implied by the $579 monthly interest charged. Actual costs vary with loan terms and rates.↩
Senate Hansard, “Economics References Committee; Reference”, 15 September 2026 (motion moved by Senator Brockman at the request of Senator Bragg; question agreed to). https://www.openaustralia.org.au/senate/?id=2026-09-15.164.2&m=100847↩
Lukošiūtė, Kamilė, John Halstead, and Luca Righetti. Global Cybercrime Damages: A Baseline for Frontier AI Risk Assessment. 2026. https://doi.org/10.48550/arXiv.2603.20570.↩
Shapiro, Paul. “Melbourne Stripper Goes on Gold Spending Spree after $750,000 Theft.” Daily Mail, October 12, 2026. https://www.dailymail.com/news/article-16192413/nicola-harrington-stripper-gold-bullion-scam-retirees-melbourne-court.html.↩