Big banks fight against regulator reform on scams

Feb 03, 2022
Australia's big banks are resisting a reform which could force them to repay customers money involved in scams. Source: Getty

The big four banks in Australia have started fighting against reform from regulators, which will leave the banks to refund billions of dollars taken by online scammers.

The banks are collectively arguing that the requirements to take on the cost of the online scams will make consumers complacent, and may lead to more losses.

Internal documents acquired by The Age and The Sydney Morning Herald through Freedom of Information laws, show that Australian Securities and Investments Commission (ASIC) detailed “strong opposition” from the banks, in regard to the proposals that banks will be obligated “to prevent scams or reimburse customers for losses”.

ASIC is at the moment reviewing the ePayments code – a voluntary code of practice that when adopted, protects consumers when making electronic payments. According to The Sydney Morning Herald, this process “has been plagued with delays”.

One internal document acquired by The Age and The Sydney Morning Herald also revealed that banks have claimed that accepting liability for “preventing customers from falling victim to scams is problematic, as it raises moral hazard issues (i.e. there is a risk that customers take less care if they know they will always be backed)” by their Authorised Deposit-Taking Institution (ADI).

Another document detailed comments that were later deleted by ASIC, which said that the banks had “already help customers in various ways”, and that the blockage of genuine transactions “is a highly sensitive issue that can lead to challenging interactions for frontline staff”.

The Australian Banking Association seems to side with the big four banks in this regard, calling repeatedly for greater personal responsibility for the prevention of scams. However, other groups in the industry, have referred to this stance as “victim-blaming”.


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