ASIC has published REP 761 Scam prevention, detection and response by the four major banks which discusses its review of the current scam-related activities of the four major Australian banks (ANZ, Commonwealth, NAB and Westpac).

The review analyses how banks can help to minimise the impact of scams on the Australian community by:

• preventing and disrupting scammers from misusing banking services to carry out and financially benefit from scams, and
• supporting customers by having effective scam prevention, detection and response activities.

The report notes that the increase in scam activity over time has been driven by a number of structural factors including the advances in technology that have improved a scammer’s ability to easily and
cost-effectively target and contact scam victims; and the move towards digital financial services, which has made it quicker and easier to both send and receive scam payments. Consumers also increased digital adoption and isolation during the COVID-19 pandemic.

In the area of liability, reimbursement and compensation ASIC notes that while the ePayments Code outlines bank liability in relation to unauthorised transactions, the majority of scam transactions are authorised by the customer and therefore not currently covered under the liability principles in that code.

ASIC also notes other potential sources of liability that banks had considered, including:

• contractual obligations;
• the implied contractual warranty in s12ED of the ASIC Act that financial services will be provided with due care and skill;
•  AFCA’s approach to similar matters (noting that under AFCA’s rules, when determining a complaint, an AFCA decision maker must do what they consider is fair in all the circumstances, having regard to
  legal principles, applicable industry codes or guidance, good industry practice and previous relevant determinations); and
• the obligation in s912A of the Corporations Act to do all things necessary to ensure that financial services are provided efficiently, honestly and fairly.

The report identifies scenarios the banks had set out where the banks considered they may be liable for and/or pay reimbursement or compensation including where there is:

• failure to warn the customer that the bank does not check the account name against the account number and BSB;
• failure to identify or exercise due care in dealing with a customer experiencing vulnerability;
• failure or delay in making reasonable inquiries with the customer where the bank was on notice that the customer is potentially being defrauded;
• errors made, or delays in, attempting to recall funds from the other financial institution which impacted recovery outcomes;
• failure to apply policies or processes that may have had an adverse impact on the customer; and
• other bank errors, such as allowing the customer to transact on an account that has an alert on it advising staff to seek assistance that was ignored.

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