New ASIC report: banks stop only 13% of scam payments

What’s in the ASIC report?

• Bank customers account for 96% of total scam losses across the banks.
• Reimbursement and/or compensation rates varied, but they range from two to five per cent across individual banks.
• Customers who filed complaints were likelier to get compensation payments from their banks, compared to customers who don’t file complaints.
• Where data was available, ASIC found that reimbursement and/or compensation payments only happened in about 11% of scam loss instances.

Some good, some bad: inconsistent scam protections

The report concludes that banks’ overall approaches to scams strategy and governance are variable and less mature than expected, with narrow approaches to determining liability.

The assessment found that victims weren’t always well supported by their banks after a loss occurred. Resourcing problems meant that cases weren’t always resolved promptly, while unclear processes created inconsistent or even bad customer experiences.

Incident response isn’t the only problem area according to ASIC’s review – so is prevention. While the banks have taken steps to prevent customers from falling victim to scams, the report found that emerging good practices were inconsistent, and it recommends that banks further evolve their scam management practices to help prevent customers from falling victim.

Deputy chair of ASIC Sarah Court has recommended that banks reconsider their response methods to reduce further distress and help customers manage the situation. She also highlighted the need for banks to inform and educate customers better and take steps to evolve their scam management practices.

Court has also emphasised the importance of collaboration between financial institutions, telecommunication providers, digital platforms, and other organisations to combat scams at the source.

What’s the takeaway for finance professionals?

The report acknowledged that banks have recently strengthened their anti-scam efforts, but these aren’t yet adequate to protect against scam techniques that are becoming more sophisticated and leveraging fast-advancing technologies. Advocating for further steps, the report provides suggestions and guidance for evolving banks’ anti-scam strategies and protections.

Certainly, the industry will need to keep making changes that protect their customers amid a rapidly changing threat environment, one where scammers are constantly hunting for new ways to bilk victims out of their money. But the takeaway for finance leaders is that customers can’t simply rely on banks to protect them from these scammers.

While stronger anti-fraud measures are crucial, there are a variety of logistical, operational barriers that make it challenging for banks to offer significant protection for customers anytime soon. Leaders who want to protect their organisation’s financial health should be looking for additional layers of protection.

One way to defend your organisation is to reevaluate your financial controls. Many controls are designed for analogue fraud instead of the growing number of online scams and tactics, creating gaps that a new generation of online fraudsters are extremely happy to exploit.