Commerce & Consumer Affairs Minister Andrew Bayly says it's inevitable government will collaborate in scam & fraud fight, but banks need to lead

Commerce and Consumer Affairs Minister Andrew Bayly says inevitably government agencies and organisations will need to collaborate with a national Anti-Scam Centre, but banks must take the lead before the Government gets involved.  

On Monday bank lobby group the New Zealand Banking Association (NZBA) said banks can’t protect New Zealanders from scammers on their own. They need help - including financial help - from the Government and other industries, such as telcos, social media companies, and search engines, NZBA said. It wants Bayly to coordinate this.

In November last year the Ministry of Business, Innovation & Employment estimated nearly $200 million was lost to scams during the year to September, an annual increase of just over 8%. And last September the Banking Ombudsman said almost a third of its annual investigations related to scams, in which victims' average losses were $57,000.

Following an inquiry by Parliament’s Finance and Expenditure Committee into banks’ processes and consumer protections against scams last year, Bayly in February asked banks to come up with a voluntary reimbursement scheme for customers who have been scammed. On Monday NZBA said banks would investigate a voluntary reimbursement scheme for customers who lose money in authorised payment scams.

'I expect them [banks] to lead this work'

Via a spokeswoman, Bayly told interest.co.nz by September he expects to receive a clear proposal from banks on how they plan to establish a reimbursement scheme, plus a proposal on how banks will update their Code of Banking Practice and introduce a confirmation of payee system.

"Everyone has a responsibility for tackling scams and online fraud and, naturally, government plays a role, along with banks, industry, and consumers. However, I have been clear with the sector that I expect them to lead this work. Banks have a duty of care to their clients, and it is important that they propose industry-led solutions. They are on the front lines with their customers and have a good understanding of what is feasible and what will make the most difference to their customers," Bayly says.

"I recently visited Australia’s national Anti-Scam Centre to see first-hand how it operates and understand how something similar could be established in New Zealand. The visit made clear the value of having a National Anti-Scam Centre, but this is something that needs to be developed by all of industry and needs further investigation."

Australia's Anti-Scam Centre launched last July, and says it "brings together experts from government and the private sector to tackle harmful scams." It's a virtual centre that sits within the Australian Competition and Consumer Commission (ACCC). The Federal Government funded the ACCC to establish the Anti-Scam Centre. Its terms of reference are here.

"The issue of scams and fraud touches on many areas of government and I am advocating for a coordinated approach to tackle it. To be effective, a range of government agencies and organisations will inevitably need to collaborate. The exact nature of the various roles and responsibilities across government are still being agreed. However, there are some preliminary steps which banks must take the lead on before government gets involved," Bayly says.

These preliminary steps include; banks providing a robust proposal to Bayly by September on how a confirmation of payee system can be introduced, how they propose updating the Code of Banking Practice, and how a voluntary reimbursement scheme for victims of authorised payment scams can be established.

"Once I have received these proposals, I can work with the various government agencies and partners to determine what the next steps should be and who needs to be involved," he says.

NZBA has suggested the involvement of the GCSB and police financial intelligence unit.

Regulatory waivers 'likely to be needed'

Banks, currently the only industry involved in the Anti-Scam Centre, also want government engagement on "any appropriate regulatory waivers" that could be considered, including for the likes of privacy, competition, and anti-money laundering laws, to remove barriers to the Anti-Scam Centre functioning effectively.

"It is likely that there will need to be regulatory waivers and cross-government agreements so that the various agencies can work together and share information to combat crime. I am open to exploring these in due course," Bayly says.

In terms of getting telcos, social media companies and internet search engines involved, Bayly says they play an important role.

"I have already had some very early conversations with telcos, and I will be looking to involve all parties more as this work evolves," he says.

"I am keen to involve social media companies and search engines in the discussion. I am optimistic that there is good will across the banking and communications industry for improving scam protections, but, the specifics of how we work together to achieve this needs further consideration."  

Funding discussions 'still need to be had'

And what about funding, will the Government stump up money to help fund a national Anti-Scam Centre?

"Discussions about funding still need to be had, but I think it is important that the banks take responsibility and contribute meaningfully to the operation of an Anti-Scam Centre," says Bayly.

In February Kiwibank CEO Steve Jurkovich told interest.co.nz Kiwibank had agreed to pay one-fifth of the cost for the "technology solution that could help with confirmation of payee and other things," alongside the big four banks, as banking industry initiatives to combat scams and frauds against customers stepped up. 

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