'Blanket' scam reimbursement by banks opposed by minister

Minister for financial services Stephen Jones does not support a “blanket rule” that would force banks to reimburse scam victims, but said obligations do need to be “clarified”.

Speaking at the AFR Banking Summit 2023, Jones said that “rectification” is one of four policy limbs that the government has set out to address with respect to making Australia - and Australians - a less attractive target for scammers.

Other “limbs” include the establishment of codes of practice and better coordination of different parties involved in scam identification and response.

Consumer advocates, including the ACCC, have been reported as backing the idea of banks reimbursing scam victims for their financial losses.

But Jones told a gathering of the finance industry on Tuesday that he did not support a “blanket rule” in this regard.

“I do not support a blanket rule to pile all the impost of scam recovery onto our banks in all cases,” Jones said.

“It is not good enough to let scammers run wild and leave the banks to wear the costs.

“Industry, including banks, should be held to a very high bar to protect consumers against scams. If they don’t meet the bar, then they should be on the hook to reimburse.

“However, if they’ve met that standard, and done what they can, they shouldn’t still end up with the bill.”

Jones said the bar for that standard needed further clarification, adding it was a position he has long held.

But he also singled out several banks for praise, including Westpac for setting up a financial crime hub in Sydney’s west, and CBA for partnering with Telstra on a new real-time scam detection service.

“Across the economy, financial services providers are investing more and more into the fight against scams and fraud,” Jones said.

“From insurers, to super funds, fintechs, payment providers and digital platforms, good work is being done. They get it.

“Systemically, we want to make Australia the least favoured destination for international scammers and the hardest place in the world for domestic scammers to ply their trade.”

Jones said the establishment of a national anti-scam centre would also help to assist in this goal.

ACCC urges sector-wide effort

In a separate speech to the same summit, ACCC chair Gina Cass-Gottlieb also praised CBA and Westpac for taking specific and targeted action to combat scams, but said she wants to see a broader finance sector-wide effort put in place.

Cass-Gottlieb urged the financial and banking sector “to re-double efforts” to crack down on scams and “help keep Australians safe.”

“Financial institutions are in a unique position to help and more needs to be done to ensure banks are detecting and blocking scam transactions,” she said.

“We are encouraged to see banks taking promising steps towards enhancing protections for their customers.

“Unfortunately, there are still significant gaps between sectors, between banks, and between regulators that scammers exploit to steal money from customers. 

“So we would like to see initiatives that apply across the sector, knowing that scammers will target the weakest link.”