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Financial institutions are being told to improve their scam-handling procedures, with a new Australian Securities and Investments Commission (ASIC) report declaring that customers of major banks lost over $558 million in the previous financial year.
“Combating scams is a critical task for all of corporate Australia — financial institutions, telecommunication providers, digital platforms and other organisations need to work cohesively to stop scams at the source,” said Sarah Court, ASIC deputy chair.
Scam prevention, detection and response by the four major banks, the latest report from ASIC (Report 761), has called on financial institutions to up their game.
“Between 1 July 2021 and 30 June 2022, more than 31,700 customers of the four major banks collectively lost more than $558 million through scams,” said ASIC.
“This was an increase of 49 per cent in customers and 50 per cent in financial losses compared to the previous 12-month period. During the same period, banks paid approximately $21 million in reimbursement and/or compensation payments to customers who fell victim to a scam.”
ASIC found that banking customers are the largest contributor to scam losses, making up 96 per cent. Despite this, banks only “detected and stopped” approximately 13 per cent of scam payments (not including those prevented before the customer made the transaction) and only reimbursed or compensated 11 per cent of incidents.
The new ASIC report reviewed the procedures of the four major banks in Australia and found a number of alarming statistics that show that banks are inconsistent in their protections, with procedures varying widely across banks.
“We observed resourcing issues which meant that for some banks, scam cases were not being resolved in a timely manner; process gaps and lack of clarity in processes that caused inconsistent and sometimes poor customer experiences; and gaps in how the banks identified and managed customers experiencing vulnerability,” it said.
Calculating liability was inconsistent as well, meaning two people in the exact same scenario might get different outcomes depending on their bank.
In addition, inconsistencies and gaps in the banks’ abilities to mitigate scam payments were also observed by ASIC.
“For example, the ability to hold payments in real-time differed between banks, and depended on the specific payment channel and network involved,” it said.
ASIC said that banks play an important role in preventing financial scams and supporting the customers affected.
“Banks have a critical role as part of a broader industry ecosystem that includes financial institutions, telecommunications providers, social media platforms and digital platforms, among others, in helping to minimise the impact of scams on the Australian community by:
“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,” added Court.
“ASIC expects that this review will aid banking and other financial service businesses, telecommunication providers, digital platforms and other organisations in developing consumer-focused scams management practices and strategies.”
The entirety of Report 761 can be found on the ASIC website.
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