24 April 2023
RICHARD GLOVER: Anna Bligh is the CEO of the Australian Banking Association. She joins us here on Drive. Anna Bligh, good afternoon.
ANNA BLIGH: Good afternoon, Richard, how are you?
RICHARD GLOVER: Good. Well as you’ve heard from Sarah Court, I think listeners too understand that there’s some complexity here. But the idea that there’s such variability between the banks and within the banks about who gets compensated, and who doesn’t, under what circumstances, that’s no good, is it?
“One of the things scammers play on is they create a sense of urgency and panic, and they play on our fears. We’ve all had this, there is no scam that we’re aware of that’s ever come to people through their banking app. It comes to people through their telephone, through an email through an online platform through a shopping channel. And they create a sense of panic.”ABA CEO, Anna Bligh
ANNA BLIGH: Well, I think you’d find different practices in almost every corporation in Australia. None of them are carbon copies of each other. But, of course, some kind of consistency is important. And with the rapid acceleration of scams over the last two years, particularly post COVID, and with the Russian invasion of the Ukraine, there’s a number of things that have seen a very big and rapid acceleration. Banks identified the need for more consistency last year, and they’ve been working towards an industry wide standard that customers could expect when something like this happens to them. It’s a very traumatic event when people lose money, when they’ve been tricked out of money. And that’s what these scammers do. The definition of a scam, Richard is where somebody has authorised the transaction and generally, they’ve been tricked into doing that. So it’s a pretty horrible feeling when it happens. Banks – like telcos, online platforms, law enforcement agencies – everybody is trying to stay ahead of what are really sophisticated criminal gangs. Banks are not police officers, they have some investigative capability, but ultimately, this is criminal activity.
RICHARD GLOVER: The other thing in ASIC’s report is that you’re managing to stop about 13% of these, which is good, but it’s not a particularly high figure. I quoted an example from the Sydney Morning Herald today where a woman lost at $97,000, in two of the big transactions were over $40,000 each. She sounded like the sort of woman who doesn’t often move $40,000 around. Isn’t that the point where the bank should be putting a bit of friction in that transaction to say, look, here’s a customer who pays bills of $100 sometimes, but never moves $40,000 We’re going to look into it?
“In most cases, for most banks, you have to set a daily limit. You couldn’t transfer $40,000 out of your account unless your daily limit was greater than that.”ABA CEO, Anna Bligh
ANNA BLIGH: Well, first of all, let me say something about the 13%. I think it’s a bit unfortunate that this is the figure being pulled out because it’s a very serious under representation of what I think is pretty strong work that banks are doing. The ASIC report does acknowledge that that figure only applies to those scams where the customer has already made the transaction. When speaking to banks about this, all of those scams where the bank gets to the customer before they make the transaction, at least one of the major banks I spoke to today said on average, it’s about 60% of incoming scams that they stop, and many of your listeners will have had this experience. You get a message from your bank saying somebody is transacting on your account in Mexico, is this you, please confirm? Or there’s suspicious activity, give us a call. That certainly happened to me. And I know it happens to other people very regularly. That’s the kind of thing that actually stopped scams, before the customer ever makes a transaction to a scammer. I said, they’re stopping about 60% of what are literally millions and millions a day. So yes, is there room for improvement? Absolutely. But it’s a lot more than 13% that banks are stopping every single day and I do think they deserve some credit for it, and your listeners will have experienced it. In relation to the case you’ve mentioned, I have to say it’s hard because I don’t know all the circumstances. But in most cases, for most banks, you have to set a daily limit. You couldn’t transfer $40,000 out of your account unless your daily limit was greater than that. So as I said, I don’t know this woman. I don’t know her circumstances. But it may well be that she had a very high daily limit set because she does make those kinds of transactions from time to time. As I said, I make no comment.
RICHARD GLOVER: Okay. That’s an important little bit, isn’t it, even if you have put up your limit, because you were buying a house or something like that, you can put it down again, and you probably should put it down again, if you’re not regularly making payments.
ANNA BLIGH: Very good advice. But on the question of friction, I can say that banks already do put friction in, as I said, you’ll often get a message saying this is a new payee, this payment may not be processed for 24 hours or more. But there may well be a case for some more friction and it is something that banks are talking about. We live in a pretty fast world and customers do expect things to happen quickly and easily and smoothly. And it may well be, we all as customers have to make a bit of a trade off that a little more friction might keep us a little bit safer. And finding that fine line is not an easy thing, but it is a live discussion with banks.
RICHARD GLOVER: Okay, can I ask you finally, obviously this money if it’s $40,000, or whatever, it can’t be taken out of an ATM the next day, it’s obviously gone into somebody’s bank account, and then sat there in a way that they can then move it onwards or use it in some ways. Shouldn’t banks be a bit better at – if I’ve complained about it, If I’ve seen the money’s gone – following the money trail, finding what account it’s gone into, finding who set up that account, even if the money has been removed and the account then shut down. Can’t they go back and find out who set it up in the first place? After all, setting up a bank account requires quite a lot of identification?
“Remember the money and funds available to banks, the majority of them are other people’s deposits. So they need to be very careful about how they use that money. Establishing liability is a very important part of that. Banks have a real responsibility to their depositors as well to make sure they’re using those funds in a careful, prudent and wise way. I think there’s a real question there about whether your deposits and your bank should be paying out to someone who decided to take a big investment risk.”ABA CEO, Anna Bligh
ANNA BLIGH: Absolutely. And these are the circumstances in which they involve law enforcement agencies. And there have been some very substantial prosecutions. But one of the things that I think is important for people to understand, and why it’s so important to stop and think before you press the the button and send money to someone you don’t know, is because these people, as I said, they’re sophisticated international criminal gangs. And the money doesn’t always just sit in some other account for days, the typical pattern is that it hops, it goes out of your account, it’ll go into another Australian account and then very quickly, it hops to a crypto platform and then out of the country, and then not even Interpol can find it. So, the speed at which these things happen makes them even more difficult [to track]. One of the things scammers play on is they create a sense of urgency and panic, and they play on our fears. We’ve all had this, there is no scam that we’re aware of that’s ever come to people through their banking app. It comes to people through their telephone, through an email through an online platform through a shopping channel. And they create a sense of panic, Oh, you haven’t paid a bill, we’re the Tax Office, you owe us money, we’re going to send this to the police. And suddenly people are panicking and it overrides their general sense of caution. So the best advice is to stop and think if it sounds too good to be true as an investment it probably is. If this person is pushing you harder than you would expect then it’s probably not your bank. They’re the sort of things that we all can do to protect ourselves.
RICHARD GLOVER: Anna Bligh is here, the CEO of the Australian Banking Association. Quite a few people on the text making the point that the banks require us to have all these electronic accounts if they’ve shut down the old passbook systems and they’ve made it very difficult to actually go into the bank and look someone in the face therefore they should compensate that’s the view or at least have some people on the text in that they’ve set up these schemes for their own financial convenience, maybe as well as ours. But this is a cheap way of running banking, it’s got some dangers, shouldn’t they compensate for the dangers?
ANNA BLIGH: Well, there’s a couple of different things there Richard, where bank systems and money goes out of your account that you have not authorised banks are signatories to a Financial Sector ePayments code. And they do compensate in those circumstances. Where there is always a question is where you have personally authorised the payment, then it’s a pretty grey area about where the liability lies. Remember the money and funds available to banks, the majority of them are other people’s deposits. So they need to be very careful about how they use that money. Establishing liability is a very important part of that. I know that people would love it. It’s a terrible thing to be scammed. It’s awful. Of course, it would be great if someone came along and just fixed it all. But banks have a real responsibility to their depositors as well to make sure they’re using those funds in a careful, prudent and wise way. So there are circumstances where the liability can be clearly established and banks can and do compensate. The single biggest losses from scams are from investment scams. So scammers that say they are investment companies advertising online, they don’t even have a financial licence – they account for more than 60% of losses. Where somebody makes a decision to invest in an investment company that isn’t real and then finds out that they’ve given their money away to a scammer, I think there’s a real question there about whether your deposits and your bank should be paying out to someone who decided to take a big investment risk.
RICHARD GLOVER: This is an honest question, I still don’t understand, when that money goes to some Australian account even momentarily, why the owner of that account, the scam account can’t be identified and then prosecuted.
ANNA BLIGH: And as I said, in many cases they are. But sometimes people are sending money straight out of the country. I saw one the other day and in one of the newspapers and it was someone who invested in an investment company registered in Singapore, they did an overseas transfer, it was promising big returns, and I can understand the temptation. But as I said, more than 60% of all scams are these dodgy investment companies. And frankly, one of the things we’re calling on the government to do is to have a look at banning the advertising of these companies on the big platforms, because if they haven’t got a financial services licence, then we don’t understand why they’re allowed to advertise as legitimate finance companies.
RICHARD GLOVER: Yeah and there are questions as I’m sure everyone realises about the telecommunication companies and whether they can’t do a little bit more to stop these scams getting through in the first place. Anna Bligh, thank you very much for your time this afternoon.
ANNA BLIGH: Thank you.
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