In Australia, scams and online frauds are causing a staggering estimated loss of $2.74 billion in 2023. The government has allocated a significant amount of funding, totalling $86.5 million, towards implementing the National Anti-Scam Centre and establishing the SMS sender ID registry. Additionally, they plan to invest an additional $67.5 million over the course of the next four years.

However, the Australian Banking Association (ABA) has not yet demonstrated any concrete efforts to prevent its members from engaging in deceptive practices that harm customers. Interestingly, scams have already affected three out of the four major banks in Australia. The Hayne Banking Royal Commission recently discovered that a prominent bank had overcharged interest on loans. 

They used deceptive tactics, pretending to be scammers, to discourage customers from reclaiming the money owed to them. In a separate incident, a bank helped a family member with abusive intentions defraud one of their own customers out of $440,000. In a shocking move to hide their wrongdoing, the bank blamed the scam victim.

Some people have criticised the ABA’s proposed changes to the Banking Code, which ASIC is currently reviewing. The combined Consumer Representatives have proposed changes that have raised concerns about reducing consumer protections and eliminating complaint and internal dispute resolution processes. Consumers may find it more difficult to seek restitution. Robb Preston, a Treasury spokesperson, acknowledged that the government has limited authority to intervene in ASIC’s decisions regarding the ABA’s proposed code changes.

Strong advocates are urging the Australian government to adopt a model similar to the UK’s, where banks must provide compensation to victims of scams. The UK scheme, which authorities expect to make compulsory, mandates that both sending and receiving banks must jointly bear the cost of reimbursing victims of scams, unless they find that the customer engaged in fraud or grossly negligent behaviour. This approach not only holds banks accountable but also encourages them to prioritise investments in effective scam detection and prevention measures.

Rob Jones, a representative from Choice, emphasised the significance of adopting the UK model to rebuild trust and confidence in the financial services sector, particularly as everyday Australians grapple with rising cost-of-living expenses. “We need a robust framework that not only compensates victims but also prevents these scams from occurring in the first place,” Jones stated. Implementing such a scheme is necessary to maintain a robust and competitive financial services sector that places consumer protection as a top priority.

Australians who are already struggling with the high cost of living would definitely appreciate if they receive additional consumer protections and support in case they become victims of scams or online fraud. This government must prioritise the preservation of trust, confidence, and integrity, while also fostering a robust and competitive Financial Services sector.

Justin Lance Marcel Lavadia

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Justin Lavadia is a content producer and editor at Public Spectrum with a diverse writing background spanning various niches and formats. With a wealth of experience, he brings clarity and concise communication to digital content. His expertise lies in crafting engaging content and delivering impactful narratives that resonate with readers.

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