Berrill & Watson welcome the news that the Australian Government will legislate a framework to place meaningful obligations on banks, telecommunication companies and social media companies to prevent financial scams and to provide appropriate compensation where those entities have not met their obligations to the consumers.
We have acted for many victims of financial scams and the stories which they tell are harrowing accounts of devastating personal financial losses. We agree with the Minister for Financial Services, Stephen Jones, that the existing laws to protect Australians against scams are not fit for purpose and need reform.
Proposed protections for victims of authorised financial scams
We are pleased to hear that there will be redress available for victims of authorised transactions. Historically, if a consumer authorised a transaction because they had fallen victim to a scam, in many instances, they would not be entitled to compensation.
Proposed amendments to the law in relation to authorised transactions is important because it recognises that scam victims often authorise a payment which they reasonably believe is legitimate only to later realise they have been scammed.
If a bank or other provider hasn’t met their obligations, or hasn’t taken appropriate steps to protect their customer, then redress should be available, including compensation for any losses.
Further reading: “Can I get compensation for losses due to a scam?”
Proposed penalties for banks, telcos and social media platforms
Taking the legislation a step further, the Government also proposes to introduce penalties for companies that fail in their duty to introduce safety measures, including preventive checks, within their internal systems or on their digital platforms.
The Government is currently proposing to introduce a mandatory code of conduct specifically tailored to each sector (e.g. banks/financial institutions, telecommunications companies, social media platforms).
Breaches of the mandatory code of conduct, including failing to maintain safe systems for consumer use, will see penalties applied (in addition to any compensation available to the consumer directly). It would be hoped that any fines/penalties applicable will be substantial enough to ensure the organisations meet their obligations to protect their consumers/customers better.
Further reading: “ASIC report reveals big four bank failing to prevent and respond to scams”
Keenly awaiting more detail in the proposed legislation to strengthen protections against financial scams
We are pleased to hear Minister Jones say that the new financial scams framework will be effective, enforceable and fair.
Being the victim of a scam can truly be a life-changing experience and there are more victims with each day that goes by. We have had hundreds of enquiries from victims of financial scams. It is important that these new protections are put in place as soon as possible to help consumers and protect them from becoming scam victims.
As is always the way with significant legislative changes of this kind, the details will matter, and we look forward to seeing the details of the proposed reforms once they are released. We do not have a timeline for that at this point.
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