ASIC wants to force the big banks to refund billions of dollars lost in online scams. 

The Australian Securities and Investments Commission (ASIC) is considering new requirements that would see banks become obliged to prevent scams or reimburse customers for losses.

Unsurprisingly, Australia’s major banks are fighting back. 

The regulator is reviewing the ePayments code, which is a voluntary code of practice that contains consumer protections for electronic payments, but the process has been plagued by delays.

The Australian Competition and Consumer Commission (ACCC) called on the ASIC to include scam prevention as part of its review back in 2020, but fierce pushback from the banks caused ASIC to decide against this idea. 

In internal documents obtained by reporters under freedom of information, it has been revealed that the banks told ASIC that accepting liability for “preventing customers from falling victim to scams is problematic, as it raises moral hazard issues (i.e. there is a risk that customers take less care if they know they will always be backed by their ADI).”

In the UK, regulators have enhanced scam protections by increasing the liability on banks to reimburse customers who lose money, and introducing a “confirmation of payee” (CoP) mechanism that requires banks flag payments if an account name does not match the BSB and account number.

Both the ACCC and the Consumers’ Federation of Australia (CFA) want a name-checking tool introduced in Australia, claiming it would help fight scams in which false invoices are used to request payments to fraudulent accounts using genuine business names.

The banks allegedly claimed that they “already help customers in various ways” and said blocking genuine transactions “is a highly sensitive issue that can lead to challenging interactions for frontline staff”.

When ASIC considered requiring  on-screen warnings that inform customers about risks of entering incorrect details, the documents allegedly show there was also “resistance to this suggestion from banks” out of concern that it would “likely be expensive and resource intensive”. 

The documents also show ASIC staffers noted “a warning message is not a panacea” and questioned why there are account names in transactions if they do not matter.

The Australian Banking Association (ABA) says avoiding scams is a matter of personal responsibility.