ASB chief says government must be involved in anti-scam centre

Thursday, 15 February 2024

Vittoria Shortt, chief executive of ASB.

The government must take a leading role in creating, running and funding an anti-fraud centre, says ASB bank chief executive Vittoria Shortt.

Shortt was speaking after the ASB announced a drop in profits, in part driven by rising costs, including having to spend more on fighting scams.

ASB would spend a record $100 million fighting financial crime and frauds this year, Shortt said, lifting the bank’s costs, affecting the interest it charged on loans, and paid on deposits.

The government must announce its response to last year’s Finance and Expenditure Select Committee inquiry into bank scam protections for consumers by March 1, and Shortt wants to hear that it will throw its muscle behind the anti-scam centre banks are working to see created.

“The thing I will be advocating hardest is to have an anti-scam centre like in Singapore, like in Australia, like in the UK,” Shortt said.

“I really want the Police to be at the heart of it. They have the operational skills. They have the formal powers that enable them to enact it. They have the relationships with Police in foreign jurisdictions,” she said.

Banking Ombudsman Nicola Sladden tells MPs on the Finance and Expenditure Select Committee that the UK has tougher scam compensation rules on banks than New Zealand does. The hearing was held in June 2022.

“Clearly that will require ministerial support,” but also government funding.

Banks hope an anti-scam centre would be a conduit for them to share information with each other, but it could also coordinate a national strategy to protect New Zealanders from scammers, as well as hunting down scammers here and overseas.

A sharp focus has been brought onto banks’ failures to check that account name and numbers match before allowing payments to be made, or to deploy systems to spot “red flags” that could indicate one of their customers is being scammed, a process that’s in place in the UK known as confirmation of payee.

In September, banks announced they would work together to develop better protections for customers, and in December they started sharing information on suspected “mule” accounts, which scammers use to send money out of the country.

Shortt denied that New Zealand banks had been slower than those in Australia and the UK to beef up their scam protections.

In Australia CommBank, which is owned by Commonwealth Bank of Australia, which also owns ASB, introduced a Namecheck service in March last year which it said in November had prevented more than 10,000 scam payments worth A$38m, and had reduced accidental payments to the wrong account by more than A$100m.

There have been calls to make banks compensate customers for more of their fraud losses, as now happens in Britain.

But Shortt said: “We have been focusing on some of the things the Australian market does not have, and vice versa, but we are all headed in the same direction.”

Namecheck only checked account names and numbers matched on payments between CommBank accounts.

In New Zealand, she said: “What we’re trying to do is get an industry-level Namecheck.”

Australian banks were also aiming for a national confirmation of payee scheme, and hoped to have it in place by the end of the year.

New Zealand banks have pledged to create a confirmation of payee scheme here, but no date has been set for that to happen.

However, Shortt said she expected the New Zealand Banking Association to make an announcement within the next two months on when a confirmation of payee system was likely to be in place in New Zealand.

Shortt said confirmation of payee was only part of the defence against scams.

The UK had confirmation of payee, and scam losses were still rising there, she said.

Banks have also been criticised, including by fintech companies in a report issued by the Commerce Commission on Wednesday, that they have been dragging their feet on implementing open banking.

Open banking is the term for the tech-driven revolution in financial services overseas involving non-bank tech companies building money management and payment app services for consumers.

Open banking is touted as a way of bringing more competition to the banking sector and delivering a better deal to consumers.

But for open banking apps to work safely, secure interfaces with banks (known as APIs) are needed to give app providers and other companies the ability to access their customers’ banking data, and do things like initiate payments on their behalf.

But banks have been accused of dragging their heels on open banking, having been rebuked as far back as 2019 by the government for their tardiness.

But Shortt said she was worried about open banking.

“I’m really worried that people want to all of a sudden to open up all of the customer data to a whole bunch of people who can use it,” she said.

“I think the priority has got to be safety first. The priority has to be that we can get on top of crime, frauds and scams before we start making things open and fast We have got to get our sequencing right here.”