Scam victims want ANZ CEO off Banking Ombudsman board

Saturday, 17 February 2024

Scam victims who have been conned out of hundreds of thousands of dollars have called for ANZ chief executive Antonia Watson to resign from the Banking Ombudsman’s board over an email debacle.

The victims, who complain their banks did not do enough to protect them from being scammed, are also calling for root and branch change at the ombudsman scheme, including that bank chief executives no longer be allowed to sit on its board.

In particular, they have called for ANZ chief executive Antonia Watson to resign after a debacle in which fraud guidance for banks from Banking Ombudsman Nicola Sladden was not read by anyone at ANZ, after the bank’s email system sent it to a spam folder.

Banking expert Janine Starks, who is helping scam victims who bank with all the major banks take their complaints to the board, said ANZ’s failure to have systems in place to ensure it received guidance from the Banking Ombudsman was “negligence of the highest level”.

ANZ said no information in the spam-foldered email was not already known to ANZ.

“We are comfortable that our systems are working as they should. This was not negligence,” a spokesperson for the bank said, adding it was common overseas for industry representatives to sit on the boards of disputes schemes.

Sladden said she could not discuss specific complaints for privacy and confidentiality reasons.

Victims are also asking the board to investigate whether Sladden has adhered to the Banking Ombudsman’s scheme terms of reference when making her decisions, including whether she had met the scheme’s guiding principle of fairness.

However, Sladden said the scheme’s board did not review complaints about individual Banking Ombudsman decisions.

“Given the fundamental importance of the Banking Ombudsman’s independence and impartiality, it would not be appropriate for the board to review Banking Ombudsman decisions,” Sladden said.

Starks said she expected the board to discuss the complaints.

“To be clear the formal complaints being made by victims are not about their individual cases,” Starks said.

“If a victim feels the Ombudsman is in breach of the terms of reference, that is firmly a board matter. In addition, if they are in breach of core values under the Disputes Resolution Act, that is also a board matter,” she said.

Sladden said by law the Banking Ombudsman scheme had to be independently reviewed every five years, and the next one was happening later this year.

“This review considers the scheme’s compliance with its terms of reference, and invites public submissions on the scheme’s performance,” Sladden said.

Starks said: “It’s pretty lucky we have got a review this year, and don’t have to wait five years.”

Scam victims would like to see the Government review and overhaul the Banking Ombudsman scheme, and are hoping Commerce and Consumer Affairs Minister Andrew Bayly will decide to do so by March 1.

That’s the date the Government must respond to a report issued last year by the Finance and Expenditure Select Committee inquiry into bank scam protections for consumers, which concluded that “banks’ processes in New Zealand should be strengthened to protect consumers against scams”.

The inquiry was held as it became clear the country was being hit by an unprecedented crime wave of overseas scammers trying to defraud New Zealanders. In September last year, polling company Horizon Research estimated the number of fraud and deception crimes had risen to 510,000 from 288,000 the previous year.

“If the Ombudsman and the board refuse to hear these complaints, the next step is the minister,” Starks said.

However, the select committee only called for banks to make voluntary changes to better protect the public from scams, rather than recommending Parliament step in and set minimum protections from the banks, and make them liable for scam losses.

Bayly, who as Commerce and Consumer Affairs Minister appoints one of the five board members of the Banking Ombudsman, was one of the MPs sitting on the select committee at the time.

The rules of ombudsman scheme, which was originally set up as a voluntary scheme by banks, stipulate banks always have two seats on the board, consumer representatives have two seats (currently held by Consumer NZ chief executive Jon Duffy and chartered account Kenina Court) and that there is always an “independent” chair.

The scam victims say the ombudsman scheme is no longer fit for purpose, despite two of them winning sizeable awards against the Bank of New Zealand through the scheme, after Sladden concluded the bank had missed “red flags” that should have alerted bank staff to the likelihood their customers were being scammed.

Among the issues they wish the board to look into is whether the Banking Ombudsman scheme has misinterpreted one of her terms of reference. This says the scheme can only hear complaints from people who have a “direct relationship” with the bank they wish to complain about.

Starks said for scam transactions, the ombudsman considers this to mean the bank at which the person complaining holds an account.

But Starks said each transaction is a banking service provided by two banks, the sending bank, and the receiving bank, meaning a scam victim has a direct relationship with both banks, and should be able to take a complaint against a receiving bank.

Starks said scam victims have been horrified to find they had sent money to accounts at other New Zealand banks which should have identified their accounts were being used to launder the stolen money for scammers.

Sladden said complainants were not bound by our decisions, and could choose to sue banks through the courts.