Customer complaints first alerted the bank to problems with the offset accounts in 2010, which then led to a four-year review led by PwC. The head of the bank’s Australian operations, Phil Chronican, said the bank had also decided to put all of its products under the microscope as part of a separate review taking in several million accounts. ‘‘Part of our ongoing program of work at the moment is to make sure that all of our accounts are performing in accordance with the terms and conditions documents that are out there,’’ Mr Chronican said in an interview. The move to carry out the ‘‘thorough’’ internal review of its products is a precautionary measure in response to the problems with its offset accounts, he said. The probe will cost the bank several million dollars in staff hours. ‘‘When you discover an issue of this nature, you want to be 100 per cent sure that you haven’t got anything else of that nature in your business, so we’ve been reviewing all of our products,’’ Mr Chronican said.

‘‘We literally are going through every product, every terms and conditions booklet, and checking the systems against the products against the terms and conditions.’’ The internal review is taking in all of its deposit products, credit cards and any remaining mortgage products that have not already been assessed. It has been running for a little more than a year, and he said it had so far not turned up anything ‘‘material’’ aside from some relatively ‘‘small issues’’ in its commercial accounts. Offset accounts are deposit accounts attached to a mortgage and they are increasingly popular with borrowers trying to repay loans quickly. The balance in the offset account is deducted from the mortgage balance for interest calculations, but in ANZ’s case key processes were done manually, and not always on time.

‘‘Because the process of linking the accounts was a manual one, in some cases there was a delay between the loan being drawn down and the offset account being properly linked,’’ Mr Chronican said. ‘‘In most cases these things were fixed within a week, but the customer didn’t always get that credit.’’ The average refund to customers affected by the offset account glitch is $300. The bank says it will also reimburse people for foregone interest or money they would have saved on their loans. It comes after Bank of Queensland was last year forced to refund $34.5 million to customers after interest rate glitches with its offset accounts, while NAB’s British arm was fined 8.9 million pounds by the British regulator for its response to similar mistakes. Australian banks have not been fined for the errors with their offset accounts by the Australian Securities and Investments Commission, because it believes they have addressed the problems and reimbursed customers.

A senior executive at ASIC, Tim Gough, said he did not think there was a systemic issue with offset accounts, but any manual process had scope for human error. "To the extent that any manual part of that process is involved, it sets you up for human error,’’ he said. ‘‘You couldn't rule out there being other types of issues where systems did rely on some manual intervention but we don't think there's a particular mortgage offset issue." A bank would be more likely to face a penalty for an error like this if they had failed to find the error themselves or if they refused to take appropriate action, he said.