Banks shouldn’t be left to foot the bill of cyber attacks: Assistant Treasurer

Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, has said that he does not believe there should be a “blanket rule” to make banks and lending institutions responsible to recover the costs of scams and cyber attacks.

Speaking to the AFR Banking Summit on Tuesday (28 March), Mr Jones flagged the growing frequency and severity of cyber attacks and scams in the Australian financial system, stating that while more transactions moved online, it was becoming “easier to lose money to scams and frauds”.

“As the technology improves and develops, scam techniques develop right alongside it,” he said, estimating that Australians lost $2 billion to scams in 2021 and between $3 billion and $4 billion in 2022.

“The amount lost per scam is getting bigger as well. The majority of people lose between $10,000 and $50,000, but that number has gone up 35 per cent in a year.

“That is crippling, for almost anyone. But it damages our broader economy too,” he said, suggesting that the overwhelming majority of money “scammed out of the pockets of Australians is immediately sent overseas and never seen in Australia again”.

“It costs us all. It means less economic activity, and less taxation revenue, on top of the devastation caused to thousands and thousands of Australians. 

“It rattles consumer confidence, and undermines the basics of our financial system,” Mr Jones told AFR Banking Summit delegates.”

According to Mr Jones, payment redirection scams (such as those targeting mortgage deposits) are the most common type of scam affecting business, with small and microbusinesses especially vulnerable. 

“They make up more than half of payment redirection scam reports,” he said, but added that, for individuals, this year the payment methods resulting in highest losses were bank transfers, then crypto.

Indeed, the financial system has been the target of several of the largest cyber crime incidents in Australia’s history in the last 12 months, including the recent attack at Latitude Financial Services, which has compromised millions of Australians’ ID documents. 

While he noted work was being done by banks to address the issue (particularly calling out Westpac’s new finance crime hub in Parramatta and the Commonwealth Bank of Australia’s work with Telstra), he said that banks should not be left to foot the bill for scams.

“[W]e also have some work to do to clarify the obligations on these providers, particularly what they need to do to protect consumers from scams, and to clarify when they’re on the hook for losses, and when they’re not,” Mr Jones said.

“I do not support a blanket rule to pile all the impost of scam recovery onto our banks in all cases. It is not good enough to let scammers run wild and leave the banks to wear the costs.

“Industry, including banks, should be held to a very high bar to protect consumers against scams. If they don’t meet the bar, then they should be on the hook to reimburse.

“However, if they’ve met that standard, and done what they can, they shouldn’t still end up with the bill.

“As we said before the election, obligations need to be clarified.

“But we also need coordinated, systemic defences against scams, and more informed, alert consumers.”

The Financial Services Minister said that the government wanted to make Australia “the least favoured destination for international scammers and the hardest place in the world for domestic scammers to ply their trade.”

However, the Assistant Treasurer said that “scams are everyone’s problem” and it is therefore “up to all of us to fight back”.

“[W]e have to work together in ways we haven’t had to before,” he said.

“We need to think about these things in a new way, and approach them in a new way,” noting that the federal government’s work so far includes the establishment of a National‑Anti Scam Centre, a new Cyber Security Strategy, and the Attorney-General’s review of the privacy legislation that focuses on when data is required to be shared and how data is stored, shared, and protected.

“This Government is standing with consumers and taking up the fight, shoulder to shoulder with them. 

“And we know that there are companies, and other organisations all around Australia, including plenty in this room, who are alongside us as well.

“We’re doing it because, morally, it is the right thing to do.

“But we’re also doing it because economically, it is the only thing to do.

“We can’t afford to lose.”

[Related: Banks have ‘big responsibility’ to avoid cyber crime and scams: Senator Paterson]