ASIC is calling for all financial institutions to improve their approaches to handling scams after new ASIC analysis revealed that scam losses for major bank customers exceeded $550m last financial year and impacted more than 31,700 customers.

The figures come from ASIC’s new Report 761 Scam prevention, detection and response by the four major banks, which examined the approaches taken by the major banks to prevent, detect and respond to scams. The report focussed on Australia's four major banks as they are at the forefront of scam prevention, detection and response in Australia.

ASIC Deputy Chair Sarah Court said, ‘combatting 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.’

ASIC’s report found that:

• 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,
• scam victims were not always well supported by their bank,
• there were gaps and inconsistencies in how the banks detect and stop scam payments, and
• while there were examples of emerging good practice, steps taken to help prevent customers fall victim to scams varied across banks.

'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.

ASIC's report observed that:

• bank customers are overwhelmingly the bearer of scam losses, accounting for 96% of total scam losses across the banks,
• collectively, the banks detected and stopped a low proportion of scam payments made by their customers (approximately 13% of scam payments),
• the reimbursement and/or compensation rate varied but was low across the individual banks, ranging from 2 to 5%,
• customers who made a complaint were more likely to receive some form of compensation payment from their bank, compared to customers who did not, and
• across three banks for which data was available, reimbursement and/or compensation was paid in only around 11% of the cases where there was a scam loss.

'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,' 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.'

Ms 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,' concluded Ms Court.

Download

Report 761 Scam prevention, detection and response by the four major banks (REP 761)

Background

Combatting scams is one of ASIC’s core strategic projects. This includes an action to review the scams identification and response strategies of authorised deposit-taking institutions.

For consumers, Moneysmart provides a series of articles to help identify banking and credit scams and what to do if you’ve been scammed, including how to contact  your bank after a scam and, where necessary, how to make a complaint.