Westpac chief executive’s scam message to bank staff

Wednesday, 7 February 2024

Westpac chief executive Catherine McGrath says staff have been told they can refuse to process a payment, if they think a customer is being scammed.

There has been a massive rise in scam attacks on New Zealanders in the past year, which has put a focus on whether banks are doing enough to keep their customers safe from fraudsters.

That has resulted heart-rending cases of loss come before the Banking Ombudsman, who last week told Bank of New Zealand (BNZ) she planned to order it to compensate two scam victims around $217,000 for failing to spot “red flags” that should have alerted bank staff to the likelihood that their customer was being scammed.

The ombudsman says banks’ primary duty is to carry out customers’ instructions, but she has also made it clear banks should train their staff to recognise the hallmarks of common scams.

McGrath said Westpac staff had been sent the message not to fear to refuse to help a customer make a payment, if they suspect they were being scammed.

That could be hard, as scammers could be very convincing, and customers thoroughly hoodwinked.

“The customer wants to pay money to the scammer because they believe with every fibre of their being that it is a legitimate thing they should be doing,” McGrath said.

“I’ve said to the team, if they are really sure it’s a scam, even if the customer is asking them to make a payment, I’d rather they say no to that payment, and I get an escalated complaint, than risk the customer loses a life-changing amount of money.”

Last week, the Banking Ombudsman issued preliminary decisions on a number of complaints made by scam victims that their banks should have spotted they were being scammed, and prevent them from making payments.

Several won their claims because bank staff had failed to spot “red flags”, however, others did not succeed because they made their payments electronically without the help of bank staff, creating what banking expert Janine Starks said was a ludicrous double standard.

The scam victims complained that their banks should have developed systems to check account names and numbers matched, which would have identified they had been conned into sending money to an account on which did not belong to the financial institution they thought they were sending money to.

The banks have pledged to bring in such a “confirmation of payee” system, which the ombudsman has urged them to do, and which is already in use in some countries overseas, including the United Kingdom.

McGrath wanted the Government to step up on scams.

Banks have been working with each other, and with telecommunications companies, in a bid to reduce scam attacks, but as yet the Government has not taken a leadership role.

“A single point of entry with the government, and leadership in this space would be really helpful,” McGrath said.

“At the moment, there are a number of different government departments that are involved, and that makes it harder to get the pace of momentum,” she said.

“It’s always easier when you have a single point of leadership,” she said.

That point is not missed at the Ministry of Business, Innovation and Employment (MBIE). Its briefing to the incoming Commerce and Consumer Affairs Minister Andrew Bayly, said responsibility sat across several ministerial portfolios including media and communications, police, justice and commerce and consumer affairs.

But the Government is now on notice, with MBIE telling Bayly that “just under $200 million was lost to scams in the last year (to October 2023) according to 11 of New Zealand’s largest financial institutions”, although data from the Ministry of Justice indicates the true level of scam losses could be even higher.

McGrath said there was “absolute willing,” from everyone to tackle the problem, and banks and telecoms companies were making good progress, including a new data sharing arrangement between banks to identify and alert each other to accounts they suspect were being used as mule accounts to receive money from scam victims in preparation for sending it overseas.

Many scams start with contacts on social media, and adverts on the internet, sometimes as paid adverts known as “sponsored” links, and if platforms did not do enough to tackle that problem, then the Government should look at taking action.

“If we don’t get that progress, that’s absolutely something that should be considered,” she said.

“Everybody has got to do their part, whether its telcos, social media, banks, government, and customers,” she said.

But McGrath still said people needed to be as suspicious of people asking them for money as they would of people coming to their door.

“The narrative that the New Zealand Banking Association is putting out is ‘take a sec to check’,” she said.

“Pause, and try to understand if what you are doing is legitimate,” she said.