The New Zealand Banking Association today welcomed the government’s establishment of the Anti-Scam Alliance.

New Zealand Banking Association chief executive Roger Beaumont says: “We’ve been calling for a co-ordinated multi-sector approach to scam prevention and consumer protection since 2023. Today’s announcement is a good step in that direction.

“For a long time we have encouraged other sectors involved in the scam ecosystem to do more to prevent scams because banks cannot fight scams alone. There’s a clear role for government to co-ordinate other sectors’ anti-scam efforts. Scams typically start when people are deceived by fake websites and search engine results, fake emails, texts, social media ads and chats, and phone calls, so there’s a role for telcos, social media companies, and global tech platforms to help stop them in the first place.

“Our banks have significantly stepped up ways to help prevent scams and protect their customers.

“In April this year we finished rolling out a Confirmation of Payee service across 13 retail banks to help customers check that the name of the person they are paying matches the account number. This can stop mistaken payments and avoid payments to scammers.

“We have also recently announced a suite of other scam prevention measures that will be included in an update to the Code of Banking Practice later this year. In addition to Confirmation of Payee, banks will commit to providing pre-transaction warnings for certain payments, identifying high-risk transactions, providing a 24/7 scam reporting channel, and sharing with other banks information about accounts used by criminals. Where banks fail to meet those commitments, they will compensate all or part of the loss for eligible customers.”

ENDS

“Banks cannot fight scams alone,” he said. “Scams typically start when people are deceived by fake websites and search engine results, fake emails, texts, social media ads and chats, and phone calls, so there’s a role for telcos, social media companies and global tech platforms to help stop them in the first place.”

“At first glance, it appears to be more of an issue for retailers, many of whom no longer accept cash for security reasons and the costs of handling it.”

Banking Association chief executive Roger Beaumont said banks paid more than 22% of all corporate tax and if the Government was considering imposing extra taxes “we would hope they take into account the significant contribution banks already make to the economy, businesses, and households”.

Finance and Expenditure Committee (more…)

“The Reserve Bank’s analysis helps to quantify the potential risk to New Zealand’s financial system if the law is not corrected,” said Roger Beaumont.

“Our banks take compliance with the law extremely seriously and have spent significant time and resources to develop and implement their FCPs. They’ll also continue to work closely with the FMA on the takeaways for banks raised in the report.”

“Between 2015 and 2019 any lender who even made a small mistake in the information provided to customers, like getting their phone number wrong, could, on one interpretation, be required to repay all the interest and fees paid until the error was corrected,” Beaumont said.

“The Reserve Bank’s analysis helps to quantify the potential risk to New Zealand’s financial system if the law is not corrected. It reveals a risk of almost $13 billion in cases of incorrect disclosure where consumers may have suffered no harm. That’s money that cannot be used to lend to consumers, businesses, and farmers.”

Modelling by the Reserve Bank estimates current consumer lending law could have a $12.9 billion impact on the financial system, with the potential for an even more severe impact.

Under the Credit Contracts and Consumer Finance Act lenders must provide borrowers with information about their loan. Between 2015 and 2019 any lender who even made a small mistake in the information provided to customers, like getting their phone number wrong, could, on one interpretation, be required to repay all the interest and fees paid until the error was corrected. That consequence would be totally out of proportion with the technical legal breach, especially if there was no harm to the consumer.

A summary of Reserve Bank modelling in a ministerial briefing outlines three scenarios which estimate the potential impact of incorrect loan information disclosure on the ability of banks to meet their capital requirements. The third scenario estimates a financial system impact of $12.9 billion, and the Reserve Bank goes on to say they considered other scenarios where the potential impact would be “much more severe”.

New Zealand Banking Association chief executive Roger Beaumont says: “We support proposed changes to fix this anomaly in the consumer lending law. The Reserve Bank’s analysis helps to quantify the potential risk to New Zealand’s financial system if the law is not corrected. It reveals a risk of almost $13 billion in cases of incorrect disclosure where consumers may have suffered no harm. That’s money that cannot be used to lend to consumers, businesses, and farmers.

“At a time of economic recovery and global uncertainty, the last thing New Zealand needs is the risk of this scenario playing out. It shows why the law is bad and needs to be fixed.

“It’s important to remember that the proposed law change does not stop consumers or regulators taking action against lenders for information disclosure breaches. Nor does it stop any cases currently before the courts. Rather, it would simply ensure that any remedy would be just and equitable. It would be up to the courts, as it should be.”

ENDS