Be interesting to see if this makes any difference or just lead scammers to become even more sophisticated. I like the idea of banks being made to reimburse scam victims in full... perhaps if we had that here then they would provide better protection for their costumers.
Anti-scam measure: Banks set date for rollout of confirmation of payee - but advocate wants victim reimbursement, too
Banks will start introducing confirmation of payee from the end of November.
Experts see the service as a key measure to reduce scams. Consumer has welcomed the move but says āItās shameful itās taken so longā and called for those whoāve been scammed in the meantime to be reimbursed.
Confirmation of payee will be phased in over the next few months āto ensure proper testing and customer satisfactionā, NZ Banking Association chief executive Roger Beaumont said.
āThe good news is that banks are working to have the service available across all online personal banking channels by Easter 2025,ā he added.
As a bank customer, you can expect to hear more from your bank about their approach and timing for introducing the new service.ā
The service will let them check that the account name matches the account number. This will happen before the payment is made, Beaumont said.
It will make it obvious if a scammer purports to represent a bank when they are in fact asking you to transfer funds to the account of a person.
The new service will notify customers whether the account name and number match real-time bank records.
Customers will be provided with a match, partial match or no match notification.
Interim warnings
Earlier this year, Consumer NZ called confirmation of payee āa simple step to stamp out scamsā.
Banks had under-invested and been too slow to introduce the measure, Consumer NZās Jessica Walker said.
Beaumont said confirmation of payee required integrating different systems across multiple banks ā a complex process that took time to get right.
In the meantime, all of the major banks have introduced warnings.
For example, ANZās app now warns: āThis payment will be made immediately. Account name isnāt matched, verified or checked against account number.ā
'Shameful it's taken so long'
This morning, Walker said: āWhile it is good to hear that every New Zealand banking customer should have access to confirmation of payee by next Easter, it is shameful that itās taken this long.
āInternational experience has long found that this is a system that helps protect citizens from being scammed.ā
Walker added: āItās been operational in the Netherlands since 2017, it led to an 81% decline in the number of fraudulent domestic bank transfers there.
āHow much money have New Zealanders lost to scams that could have been prevented by CoP since then, and how much will be lost between now and the completion of the rollout?
āWe think name and account matching should have been implemented well before now, and failure to do so means that banks have not been adequately protecting their customers. We think customers who have lost money that could have been prevented by confirmation of payee should be reimbursed.ā
āIt astounds me it has taken this long to implement this critical piece of security for their customers,ā said North Shore real estate agent Carla OāNeil, who
lost $100,000 to a scam (the Banking Ombudsman eventually ordered BNZ to refund her 70% of her losses).
āAlong with the large group of victims in our support group and many more no doubt, would not have been scammed if confirmation of payee had been in place.ā
OāNeil said the current setup had given her a false sense of security.
āI know Iām not the only one who thought the payee name and payee account number were checked - because why would the bank even ask for both if the name was irrelevant?ā
David Wilson, a NZ First candidate and former chief executive of Northlandās development agency, who
lost $200,000 in a bank scam, was also critical of NZ lagging behind a number of other countries.
Wilson, who was duped by a scammer working with a mule who had been paid $20,000 to create a legitimate account, said he wanted extra measures for banks to identify the ultimate beneficial owner of an account.
Banks should āstop hiding behind privacy laws, and apply the same level of scrutiny they apply to their customers on anti-money laundering and CFT [combating the financing of terrorism legislation] to themselves, then we might get somewhereā.
āOrganised crime syndicates know where the weaknesses are in our banking system and target them. CoP will not address bank system inadequacies to prevent fraud. I know this from
personal experience,ā Wilson said.
Bayly pushed for action
The rollout follows Commerce and Consumer Affairs Minister Andrew Bayly threatening regulation if the sector did not get a wriggle on.
āThis scheme [confirmation of payee] has been effective in the United Kingdom and Australia. I would like a confirmation of payee system introduced and am aware the New Zealand Banking Association is seeking to implement this,ā Baly wrote in an
open letter to the banking in February.
āI will be closely monitoring your progress and have asked my officials to keep me updated. I expect you to prioritise this work so that the system is operational as soon as possible, with rollout commencing by the end of this year.ā
Last November, MBIE released a survey, based on data from the major banks, that said
Kiwis had lost $198m to scams in the year to September 2023. This needs to change,ā Bayly said.
The minister also asked banks to investigate an industry-led voluntary reimbursement scheme for victims of authorised payment scams.
āWe are discussing next steps,ā Beaumont said today.
UK introduces mandatory reimbursement
On October 7, the UK introduced a new rule for mandatory reimbursement for victims of āauthorised push payment fraudā, with banks required to reimburse a victim within five working days.
The UKās new fraud rules are, on one level, a victory for consumer campaigners: make this a problem for the banks, rather than their customers, and the industry will be forced to invest in fraud prevention and share information to fight the UKās number one crime on a scale never seen before, the
Financial Times reported.
However, behind the scenes, banking bosses worry the new rules could cost them a fortune, the paper added.
The move toward mandatory reimbursement followed an industry-led voluntary scheme that had mixed results.
Last year, 62% of consumers had losses reinstated under the UKās voluntary code of reimbursement, yet differing interpretations of the rules meant some banks refunded 96% of cases, while others managed just 3%ā
Phased approach
The confirmation of payee technology build and integration of the new service differed across banks, so each bankās testing and delivery phase looks slightly different, Beaumont said.
āItās crucial that all banks gain assurance the system is working as it should, across their online and mobile banking platforms and services, before rolling it out broadly.
āThis will ensure a smooth implementation, particularly in New Zealand, where so many people have more than one bank.ā
āFor customers, this means confirmation of payee might not be available across all online banking platforms simultaneously.
āThey might find that a confirmation of payee check is available from some banks and not others, alternatively, it might be available on your desktop banking platform but not your mobile app, or vice versa.ā
The phased approach was similar to how banks implemented confirmation of payee in the UK, Beaumont said.
The technology provider
On September 18, a new company was created called GetVerified,
jointly owned by the major banks. GetVerified will serve as a vehicle for co-ordinating confirmation of payee efforts.
The technology provider is Obconnect, an open banking and confirmation of payee specialist based in the UK, where a confirmation of payee service is already up and running and credited with a drop in financial losses from scams.
Obconnect had at least one rival in the tender ā fellow European firm Worldline, which earlier bought NZās Paymark.
āRemain vigilantā
While the new confirmation of payee service will help provide some reassurance to customers making domestic payments, banks are reminding customers to remain vigilant.
The system will not fully protect them from scams and criminals will continue to look for ways to trick customers into making payments, Beaumont said.
When making a payment to someone, itās always a good idea to take the time to check why youāre making the payment and whether you can trust the recipient.
Banks participating in the new confirmation of payee service are ANZ, ASB, Bank of China, BNZ, CCB, The Co-operative Bank, Heartland Bank, ICBC, Kiwibank, Rabobank, SBS Bank, TSB and Westpac.
āWe are joining a very small number of countries that already have a confirmation of payee service,ā Beaumont said.
Confirmation of payee is one of a suite of anti-scam initiatives the banking industry committed to in September last year.
Chris Keall is an Auckland-based member of the Heraldās business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
Watchdog says it's 'shameful' banks took so long to introduce confirmation of payee tech.
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