Australia’s big banks have pushed back on calls for stronger protections that would force them to refund money lost to scammers.
Commonwealth Bank of Australia chief executive officer Matt Comyn said leaving the compensation up to financial institutions had not proven to be an effective strategy.
Banks in the UK have been voluntarily refunding customers since 2019, and the practice will soon be mandatory there except in cases of gross negligence or complicity.
CBA’s deputy CEO David Cohen said the UK had observed a 250 per cent increase in scams since the voluntary code started in 2019, compared to the 33 per cent increase in scams in Australia over the same period.
“I don’t want to necessarily draw a tight line between the introduction of the compensation code in the UK and the massive increase, but it’s something we are looking at closely to just ensure that we don’t fall into the moral hazard trap,” he told a parliamentary committee on Thursday.
“Nobody wants to be the underwriter of scammers,” he added.
Mr Comyn said scams varied in nature, with a “too-good-to-be-true crypto scam” different from being tricked into downloading a piece of software when under the impression of speaking to a CBA employee.
ANZ CEO Shayne Elliott was also cautious of the UK model and said it could potentially make people less careful about falling for scams.
“Making the banks pay for it does not solve the problem, it just moves the problem somewhere else,” he said.
Labor MP Jerome Laxale, who has been grilling the big banks about their scam management throughout two days of hearings, said in the UK around 66 per cent of lost money is refunded to victims.
In Australia, it’s estimated to be as low as two per cent.
The CBA executives cast doubts over the accuracy of those numbers, with Mr Cohen suggesting one market-leading bank in the UK was substantially pulling up the nation’s overall result.
Mr Comyn backed the federal government’s focus on preventing scams at the source by making Australia a less desirable place for fraudsters.
He agreed “more needs to be done rapidly” to tackle the problem.
Consumer groups have been urging the federal government to consider tougher laws forcing banks to reimburse victims as it would incentivise them to better protect people.
Consumer Action Law Centre acting chief executive officer Tania Clark said Australian banks have been acting on scams “but at a snail’s pace”.
They had the resources to do much more, she said.
“It is clear that our major banks are not going to voluntarily lead the way and offer to reimburse customers, who through no fault of their own, get tricked into departing with their hard-earned money,” she said.
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