Mortgage offset issue affecting customers

We recently identified that some of our customers’ offset transaction accounts have not been properly linked to their home loans, which means some customers were not being charged the correct amount of interest on their home loans.

Offset accounts allow the balance of the account to reduce the home loan amount on which you are charged interest. For example, if you owe $400,000 on your home and you have $25,000 in a linked offset account, you will only be charged interest on $375,000 of your home loan (i.e. $400,000 home loan less $25,000 in the offset account = $375,000 home loan balance for the interest calculation).

We sincerely apologise to our affected customers, and assure you that we are doing all we can to prevent this issue from re-occurring.

We have started the process of notifying our affected customers, explaining the issue and any expected refund amounts they should receive.

Given the complexity of the individual amounts to be calculated on a per customer basis, we are taking a staged approach and have commenced contacting and making payments to affected customers through a progressive mail out which will continue throughout 2020. We have taken this approach to expedite refunds to impacted customers. 

No action is required from our customers, we will contact any affected customer individually.

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Following the discovery of this error, a project team has been working incredibly hard to identify which customers have been affected, and to implement the changes needed to ensure this doesn't happen again.

In the late 2019 we started notifying our customers about the issue by direct mail along with any refund amounts that are due. We will continue to notify affected customers progressively throughout 2020.

We have also established a dedicated Customer Response Team which is available for affected customers to contact directly. Each customer’s letter will provide detailed information on the issue, as well as information on the dedicated Customer Response Team and contact details to assist their enquiries.

In late 2019 we started notifying our customers about the issue by direct mail along with any refund amounts that are due. We will continue to notify affected customers progressively throughout 2020.

Customers will be advised of their expected refund and if there is any action to take to claim the refund or confirm their accounts are linked correctly.

Our dedicated Customer Response Team will be available to provide expert help to affected customers.

Your letter will explain any actions you may wish to take, and will also include contact details for our dedicated Customer Response Team. If the instructions in your letter are not clear, please contact the Customer Response Team for further advice or explanation.

Not all Newcastle Permanent home loan customers are affected by the mortgage offset issue, so not all customers will receive letters. Only customers who are affected will receive a letter.

This is a complex matter, so customer notifications will be staged to comprehensively ensure we have captured all affected customers and enable us to support them thoroughly once they are notified.

If you believe you have an issue with your offset account, you may of course contact us at any time through any of our customer support channels, and we will investigate for you.

We take any customer matters very seriously and if a mistake is found we do everything we can to rectify the problem when we find it.

We are always happy to receive feedback from our customers, and have a dedicated process for receiving and resolving feedback. You can do this through our Contact Us page.

In a recent review of our mortgage offset accounts, it was identified that some of our customers’ transaction accounts may not have been properly converted and linked to their home loans, meaning some customers were not receiving the correct benefit they were entitled to. You have been identified as one of our impacted customers.

If you are a customer that is eligible for a refund, the refund date will be detailed on your letter. Due to the complex nature of this matter, the dates will be different for all customers.

Our customers who are eligible for a refund will have the refund amount calculated to the refund payment date to ensure the correct refund amount is received.

The refund is the total offset benefit a customer may have been entitled to during the period in which the transaction account was not correctly linked to the loan account. The amount is calculated using the balance of the transaction account and the interest rate applicable to the loan type during that period.

We have started with each customer’s loan balance during the period the accounts weren’t linked properly.

We then use the balance of their offset accounts, to determine the interest the customer could have saved by having their accounts linked.

This has given us the total amount of interest benefit the customer should have received, had their account/s and loan/s been linked correctly.

We have then applied interest to that amount, to ensure we are recognising the value of money over time.

We encourage you to talk to your financial and/or tax advisor to discuss whether this reimbursement has any tax implications for you.

The table below contains our loan types and whether they are eligible for an offset account:



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