Original media release from Consumer Action Law Centre (20/04/2023), found here.
Australia’s four major banks are failing their customers by taking a ‘variable and…less mature’ approach to scams than expected, with ‘inconsistent and narrow approaches to determining liability’ as well as gaps in how they detect and stop scam payments, according to Report 761 today from the Australian Securities and Investment Commission (ASIC).
“The Federal Government must intervene now and pass laws forcing banks to reimburse customers for scams losses, except in circumstances of gross negligence,” said Consumer Action CEO, Stephanie Tonkin.
“We now have the evidence from the ACCC and ASIC within a week, that mandating action by the banks is the only way to incentivise the investment needed to tackle the scams crisis affecting Australia. The UK Government is leading the way, the Federal Government needs to follow suit to send the message to scammers that we are not a soft target,” said Ms Tonkin.
Education and awareness campaigns, while important are not going to solve the scams crisis.
“What we need to see is the shifting of responsibility from vulnerable customers to the banks, they need to take more action to protect their customers,” she said.
Ms Tonkin said the report was damning of the major banks’ response to scams and showed they are leaving their customers to pay the price to scammers who are highly organised and getting more sophisticated, even impersonating the banks themselves.
“The four major banks have the resources, data, and technology to prevent scams occurring on their platforms and from their accounts, but their patchwork efforts have failed to prevent billions of dollars in losses and fall far short of what their customers and community would expect.
“I am sure all bank customers will be shocked to learn that a paltry 2-5% of scams losses are reimbursed or compensated by the major banks. This tight-fisted and mean approach is totally unacceptable at a time when banks are posting record multi-billion-dollar profits.”
A KPMG report from November last year found that the four major banks reported a combined cash profit after tax from continuing operations of $28.5 billion in FY22, up 6.5 per cent from FY21. Despite these stellar results, the ASIC report concludes that banks haven’t invested the technological, communications and staffing resources needed to protect their customers from scams.
“We speak to people who call our helplines who have lost their entire life savings, everything, to scammers, causing disaster for them and their family, it’s heart-breaking,” said Ms Tonkin.
Consumer Action Law Centre’s paper on scam prevention can be read here: Incentivising Scam Prevention: Improving the Safety of the Payments System