The Australian Securities and Investments Commission (ASIC) has called for financial institutions to enhance their strategies for dealing with scams, following a recent analysis that revealed over $550 million in scam losses for major bank customers during the last financial year. These losses affected more than 31,700 customers.
The figures are derived from ASIC's Report 761, which assessed the methods employed by Australia's four major banks to prevent, detect, and respond to scams. These banks play a crucial role in scam prevention, detection, and response in Australia. The losses come as no surprise, as consumer advocate CHOICE indicated in September 2022 that various scams, including fake cryptocurrency investment schemes and romance scams, cost Australians over $2 billion annually.
According to the ASIC report, the major banks' approaches to scam strategy and governance were inconsistent and less mature than expected. It also highlighted that banks had narrow and varying methods for determining liability, did not consistently support scam victims, and exhibited gaps and inconsistencies in detecting and stopping scam payments. The report emphasised that despite some emerging good practices, more work is needed to prevent customers from falling victim to scams.
To help combat scams, ASIC Deputy Chair Sarah Court has urged financial institutions, telecommunication providers, digital platforms, and other organizations to collaborate in addressing the issue at its source. Initiatives like the Commonwealth Bank's NameCheck technology, which verifies account details for all transactions, can help reduce false billing scams and mistaken payments.
However, the report also found that 96% of total scam losses were borne by bank customers, and banks only detected and stopped about 13% of scam payments. Reimbursement rates were low, ranging from 2 to 5% across individual banks. Court stated that banks need to reconsider their methods of engaging with and supporting scam victims to alleviate distress and help them manage the situation more effectively.
'Australia's big four banks have invested significantly in their anti-scam efforts over the last several years and have implemented a number of innovative and positive initiatives, including some recently implemented following the conclusion of ASIC’s review. However, the increasing prominence of scams means that there is still more to be done', said Ms Court.
'We’d like to see the banks take steps to evolve their scam management practices, including how they inform and educate customers and help them through what is a distressing time.'
Consumer advocacy groups like the Consumer Action Law Centre and Choice are calling for the government to mandate reimbursements, similar to the approach taken in the UK. ASIC hopes that the report's findings will encourage financial service businesses, telecommunication providers, digital platforms, and other organisations to develop consumer-focused scam management practices and strategies.
