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New Zealand banks told to come up with a reimbursement scheme for scam victims by September

Banking / news
New Zealand banks told to come up with a reimbursement scheme for scam victims by September

Commerce Minister Andrew Bayly has ordered banks, by September, to come up with a voluntary reimbursement scheme for customers who have been scammed.

Parliament’s Finance and Expenditure Committee completed an inquiry into banks’ processes and consumer protections against scams last year. 

The inquiry report recommended adopting a Confirmation of Payee scheme, investigating a reimbursement scheme, and asking the banking sector to update its code of practice.   

Committee members said they thought banks’ processes should be strengthened to protect consumers against scams, which were becoming more frequent. 

The Banking Ombudsman told the Committee that scams had been increasing in volume, sophistication, and dollar value every year since 2015. 

Bayly, the coalition Government’s Minister of Commerce and Consumer Affairs, said on Friday he supported the committee recommendations.

“We agree that the Code of Banking Practice needs updating to protect consumers, and banks should investigate a voluntary reimbursement scheme to improve consumer compensation”.

“I have written to the banking sector, setting out my expectations. I will monitor progress in the coming months,” he said. 

A news report by the NZ Herald said the letter to the NZ Banking Association required a response by September this year and told the sector to make it a priority.

Bayly didn’t reveal what would happen if banks were to miss that deadline, but it is possible the Government could use regulation to force through the changes. 

In a press release, the Commerce Minister said it was unacceptable that almost $200 million was lost to scams last year. 

“Scams are becoming more sophisticated and causing a growing number of vulnerable Kiwis significant emotional harm and financial loss,” he said. 

“Bank processes need to be strengthened to give Kiwis better protections. A range of industry work is already underway, including establishing a confirmation of payee service, but there is more to be done”. 

UK-based Lloyds Banking Group was able to reduce bank transfer scams by more than 30% in the first few months after setting up a confirmation of payee system. 

New Zealand banks mostly support such a scheme but the reimbursement scheme could be less popular. 

The UK payments regulator has recently set new rules which require banks to reimburse fraud victims as a way to incentivise them to better prevent fraud from occurring. 

Currently, NZ banks must “act with reasonable care and skill” to pick up on warning signs of fraudulent activity and attempt to protect customers. 

As long as they meet this standard, they are not required to reimburse consumers who have been hit with an ‘authorised payment scam’ such as when they pay a fake invoice. 

Banks generally do have to reimburse customers that fall victim to ‘unauthorised payment scams’ such as phishing attacks or identity theft.

Bankers respond

Roger Beaumont, chief executive of the NZ Banking Association, said banks were committed to protecting their customers

“Confirmation of payee will start to roll out by the end of the year, and our anti-scam centre is up and running, targeting money mules,” he said. 

Banks will investigate a voluntary reimbursement scheme and their findings could be incorporated into the Code of Banking Practice.

However, Beaumont said banks should not be solely responsible for stopping scams. The Government and social media companies also needed to step up. 

“We support the Banking Ombudsman’s call for digital platforms to remove fake websites more quickly,” he said in a statement. 

“They’re often at the start of a chain of events that leads to a scam. To better protect New Zealand from scams we need a co-ordinated multi-sector approach where everyone plays their part”.

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More welfarism and protections for old people with money.  South Canterbury Finance 2.0.  

"individuals must take responsibility for their actions"


I think they prefer to be called 'savvy' property investors, Nzdan.  You know, the kind who made a killing in the landlording business over previous decades. So, the younger generation should now help bail them out with the sliver of their income that's not gobbled up by rent payments?

Every article I've ever seen about someone who got scammed showed that the victim either missed multiple red flags, or simply acted brainlessly stupid (often driven by greed following promises of gains that could only happen in a fairytales).  

Yet another example of privatise gains, socialise losses.


Meanwhile people were arguing on another article that personal responsibility trumps when young people were stress tested on their mortgages at rates significantly less than what they can refix for 12 months later.  They should have done their homework etc...

So banks must be held accountable for reckless decision of others they have no say in, but when they do have a say in something (mortgage applications) it's *crickets*?  


Banks asks government to ask banks to create a way to limit liability to themselves.
fixed it for you 


You will never stop fools from doing foolish things especially if they fool themselves that they are on a winner. Trouble is though that the scammers etc and their schemes,  are increasingly sophisticated in the use of technology and far more so than their target(s) which increasingly includes any bank’s unsuspecting customer. The banks have benefited, profited from the introduction of technology, computerised banking. In the old days they would be liable and would have to pay out if for example,  they honoured a forged cheque. Obviously as has always been the case,  there is personal responsibility but the banks need too, to upgrade their safeguards and detection to cover the prospects and opportunities of fraud that their new systems have introduced.


"Commerce Minister Andrew Bayly has ordered banks, by September, to come up with a voluntary reimbursement scheme for customers who have been scammed."

And the point of a voluntary scheme is???


This seems like a good initiative on the face of it. Why would this be a bad thing? Genuine question.


As with any new regulation, the banks won't lose and will pass on the cost of any such reimbursement scheme to the rest of us.

I believe there needs to be adequate protections against scams, but many of the people you see in the news having lost money usually ingored several red flags, advise, or straight up lied to their bank. There needs to be an element of personal responsibility on the individual when making these transactions.

If your not checking who your sending money to and it disappears... that's a life lesson that shouldn't burden the rest of us.


Why would you bother doing due diligence and spend (waste?) time checking whether the next big thing is a scam?  If you can't actually lose.  Either you'll get those fabulous, promised gains, or you'll get your money refunded by the other kind and generous banking customers (who did actually do their due diligence and didn't fall for the idiotic scam). Scammers should be excited about this initiative.


Asking them to come up with the scheme is a cunning plan....     they have to put a credible plan forward or look incompetent, and saves on consultants on his side (ie Banks will pay for them... very cunning0