Government urges New Zealand Banks to take the lead against scams

New Zealand’s banking sector is stepping up to address the growing threat of online scams and fraud, following requests from Hon. Andrew Bayly, Minister of Commerce and Consumer Affairs. The banks, in collaboration with the New Zealand Banking Association, are actively working on initiatives that align with the Minister’s call to protect consumers and enhance their trust in the financial system.

In February 2024, Minister Bayly wrote an open letter to the Banking industry outlining three key areas where he believed the banks could make a significant impact, and banks are now moving forward to implement these measures:

1. Implement a Confirmation of Payee system: Minister Bayly emphasised the importance of a Confirmation of Payee system, which matches the account holder’s name with the account number when making payments. This system has proven effective in countries like the UK and Australia in reducing fraud. The Minister expected New Zealand’s banking industry to prioritise this system’s rollout by the end of the year and committed to monitor its progress closely.
2. Update the Code of Banking Practice: The Minister urged banks to update the Code of Banking Practice by the end of the year.
3. Explore a voluntary reimbursement scheme for victims: Minister Bayly called on the banking sector to explore a voluntary reimbursement scheme for victims of authorised scams, in line with international standards.

Banks to lead the fight

While Minister Bayly acknowledged that tackling scams requires a collective effort from government, industry, and consumers, he saw the banking sector as being in a strong position to lead this fight. He encouraged continued innovation and collaboration to protect customers from online fraud and scams.