ASIC has called for all financial institutions to improve their approaches to handling scams after the organisation released new analysis showing that scam losses for major bank customers topped more than $550m last financial year.
In ASIC’s report, Scam prevention, detection and response by the four major banks, it revealed that more than 31,700 major customers had been affected by scams.
The report examines the approaches taken by the major banks to prevent, detect and respond to scams.
It focused on Australia’s four major banks because ASIC said they were the institutions at the forefront of scam prevention, detection and response in Australia.
ASIC’s report found the overall approach to scams strategy and governance of Australia’s major banks was “variable and overall less mature than expected”.
The banks had inconsistent and narrow approaches to determining liability, the report found, while scam victims were not always well supported by their bank.
There were also gaps and inconsistencies in how the banks detect and stop scam payments.
While there were examples of emerging good practice, ASIC found that the steps taken to help prevent customers fall victim to scams varied across banks.
ASIC deputy chair Sarah Court (pictured above) said the big four banks had invested significantly in their anti-scam efforts, implementing a number of innovative and positive initiatives, including some enacted recently following the conclusion of ASIC’s review.
“However, the increasing prominence of scams means that there is still more to be done,” Court said. “Our review found there were inconsistent experiences and outcomes for customers who were the victim of a scam, and in some cases a bank’s response may contribute to further distress for a customer.
“Banks need to reconsider the ways they respond to and engage with scam victims to reduce further distress and help them better manage the situation.”
ASIC’s report observed that bank customers overwhelmingly bore the burden of scam losses, accounting for 96% of total scam losses across the banks.
The reimbursement and/or compensation rate varied but was low across banks – ranging from 2% to 5% – while across three banks for which data was available, reimbursement or compensation was paid in only around 11% of the cases where there was a scam loss.
Collectively, ASIC found the banks detected and stopped a low proportion of scam payments made by their customers – approximately 13% of scam payments – and customers who made a complaint were more likely to receive some form of compensation payment.
“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,” Court said.
Court strongly encouraged all banking and other financial service businesses to consider the findings outlined in the report.
“ASIC expects that this review will aid banking and other financial service businesses, telecommunication providers, digital platforms and other organisations in developing consumer-focussed scams management practices and strategies,” she said.
