Borrowers rarely read their contracts with lenders, but generally there will be clauses which allow a lender to combine accounts – savings and/or loans – with that lender. I have never seen it happen, but the borrowers are contracting for the possibility of it happening. Also, Clause 19.1 of the Code of Banking Practice states: “We will inform you promptly after exercising our right to combine your accounts.” That’s right – after they do it they will tell you – promptly too! By then the tax nightmare will have already started. Example Homer has been debt recycling and has 6 loans of $20,000. All 6 loans relate to different purposes. Dodgy Bank is seeking to save themselves costs and combine all 6 loans into one large one – it will make it easier to manage says their letter issued after this happens. Marge also has some loans and some offset accounts with cash in them. The Dodgy Bank takes her offset money and applies it to the loans, after it consolidates them. They have reduced Marge’s non-deductible debt.