Treasury has released for consultation draft codes and rules under the Scams Prevention Framework (SPF). Background.
The Codes establish 4 distinct categories of provisions:
* common provisions that apply across the banking, telecommunications, and digital platforms sectors;
* provisions that apply only to the banking sector;
* provisions that apply only to the telecommunications sector; and
* provisions that apply only to the digital platforms sector.
Compliance with these code obligations is the primary factor when considering
whether a regulated entity has taken reasonable steps for the purposes of the corresponding SPF principles of prevent, detect and disrupt in Division 2 of Part IVF of the Competition and Consumer Act.
The draft Codes set out:
Governance requirements;
Prevention requirements;
Detection requirements;
Reporting requirements;
Disruption requirements;
Response requirements; and
Internal dispute resolution rules.
The draft rules specify that a person is not an SPF consumer of a covered banking service where they do not have a direct relationship with the regulated entity providing the service (the bank), or they are not making a payment to, or receiving a payment from, the bank. This exception is intended to ensure that business-to-business banking services, such as those providing back-end payment infrastructure, are not captured by the banking designation.
The draft Internal Dispute Resolution rules provide for automatic reimbursement of scam victims for verified scam losses below $3,000.
While Ministerial Guidance will make it clear that entities should reimburse consumers for scam losses under $3,000, entities will be liable for losses where they have breached their obligations under the SPF for all values of scam losses.
The draft states that where more than one regulated entity has breached its obligations under the SPF, liability should be shared equally between those breaching entities.
While entities will be required to coordinate their response to the consumer, each entity will be responsible for directly reimbursing consumers for any losses the entity is liable for.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
