Banking Sector Under Fire for Failure to Protect Customers from Scams

A scathing report by the Australian Securities and Investments Commission (ASIC) has exposed the lack of effort by major banks in Australia to prevent and respond to scams, resulting in a paltry $21 million in compensation paid to victims out of over $500 million lost.

Report Highlights Lack of Consistency and Accountability

The investigation found that only 2-5% of scam losses were reimbursed, with banks failing to provide consistent policies and procedures for handling scam cases. The report highlights the need for uniform measures across major financial institutions to combat the growing problem of scams.

Australias Record-Breaking Scam Losses

Australians lost a record $3.1 billion to scams last year, with experts warning that anyone can become a victim as scammers increasingly use sophisticated tactics.

Consumer Advocates Call for Mandatory Compensation

Consumer advocates are calling for mandatory compensation payments to victims, arguing that banks should be held accountable for their failure to protect customers. “Banks have billions of dollars in windfall profits that they should be putting towards actually fighting this crisis,” said Stephanie Tonkin, CEO of the Consumer Action Law Centre.

Banks’ Failure to Keep Pace with Scam Volume

The report also found that banks’ resourcing had not kept pace with the increasing volume of scams, leading to delays and distress for victims. ASIC deputy chair Sarah Court urged financial institutions to adopt a holistic approach to combating scams, saying “We really need to make sure that scams are dealt with in a comprehensive way by all financial institutions.”

Industry Response

The Australian Banking Association (ABA) acknowledged the need for consistency and is working on an industry-wide standard to improve scam victims’ experiences. However, consumer advocates remain skeptical, citing the banks’ lack of transparency and accountability.

Expert Advice

As scammers continue to adapt their tactics, experts warn that customers must be vigilant and take steps to protect themselves from fraud. The report highlights the importance of making transactions harder to carry out quickly, known as adding “friction,” but notes that this can be difficult in an era where customers expect speed.

Conclusion

The ASIC report has sparked calls for greater action from banks to prevent and respond to scams, with consumer advocates demanding mandatory compensation payments and improved transparency. As the battle against fraud continues, it remains to be seen whether banks will take the necessary steps to protect their customers and restore public trust.