Why Australian banks are better at stopping scammers than UK banks

The federal government has pledged to introduce legislation in the form of mandatory industry codes. These codes impose clear obligations on banks, telecoms and social media platforms to protect the community from fraud.

Although the draft legislation has yet to be published, banks support this mandatory code framework that sets out responsibilities for each sector: telecoms companies must block known fraudulent phone numbers, platforms must ensure they do not advertise fraudulent practices and remove them if they know customers have been harmed, and banks must ensure they block transfers to known fraudulent accounts.

This means that if a bank, telecom company or social media platform fails, there will be consequences, such as possible fines and the obligation to compensate victims of fraud.

Disappointingly, tech companies like Meta and Google have been reluctant to support these mandatory codes. They need to get on board.

These codes should focus on proportionate liability across the whole fraud chain, where obligations have not been met. This is a much better approach than a UK-style bank compensation model, which focuses liability on one sector only and would ultimately undermine the success of this whole fraud chain approach.

The fundamental flaw in the British model is that it fails to address the root of the problem: preventing people from being ripped off in the first place. This may be why no other country in the world has followed the same path.

Australia’s whole-of-scam-chain approach and focus on prevention is already starting to work. Last year, scam losses in the UK fell by just 5 percent, compared to our 13 percent.

There has also been plenty of controversy surrounding the UK model. The head of the UK’s Payment Systems Regulator was recently forced to resign amid a flood of criticism over the rollout of his scheme, while TSB, the bank with the highest fee rate in the UK, now receives the highest value of scams of any UK bank.

I want to be clear: if Australian banks are to blame, they will compensate victims, and that will continue. However, if the international criminal gangs that carry out most of the scams knew that money would simply be paid back by the bank, Australia would be putting an even bigger target on our backs. We would be funding criminals and giving Silicon Valley a free pass.

We need to go the other way and drive these international criminal gangs out of our country, not encourage them to settle here. That is why with our focus on prevention and a concerted effort across our economy, we can stay one step ahead of the crooks and win this war.

Anna Bligh is CEO of the Australian Banking Association. She was Premier of Queensland from 2007 to 2012.