AFCA hails elevated role in Govt’s new anti-scam mandate

The Federal Government’s proposed new Scams Prevention Framework (SPF) will go a long way to “fill gaps in the law” that prevent sufficient redress for scam victims, according to the Australian Financial Complaints Authority (AFCA), with the complaints ombudsman set to take on a far wider remit in addressing scam complaints.

The framework will, for the first time, legislate scam prevention principles that obligate designated sectors “to combat scammers and protect Australians”, the Government said.

Banks, telcos, and digital platform services will be among the first group required to enact SPF requirements, with the obligations to later be expanded “economy-wide”.

The principles create obligations for each regulated sector to “prevent, detect, report, disrupt, and respond” to scams, outlined in dedicated scam prevention codes, as well as to establish relevant governance systems to enforce these principles.

AFCA has firmly backed the Government’s proposed laws, which will see the ombudsman’s role elevated as the “single EDR [external dispute resolution] scheme” for multiple regulated sectors.

“A single EDR scheme for the initially designated sectors will offer SPF [Scams Prevention Framework] consumers a holistic experience where multiple regulated entities are involved in complaints. It would also bring consistency in consideration of complaints and be less burdensome for SPF consumers and regulated entities when compared with multi-scheme alternatives,” the Government wrote in its exposure draft.

AFCA acknowledged its elevated role in the EDR scheme, covering not only financial firms but also telecommunication service providers, and a range of digital platform services (including the social media businesses) – this will greatly assist consumers affected by a scam.”

“This will greatly assist consumers affected by a scam,” said AFCA chief ombudsman and CEO David Locke.

“As an established EDR scheme that receives more than 100,000 complaints per year, we have experience in managing and resolving scam complaints,” Locke said.

In 2023-24, AFCA reports that received approximately 11,000 scam-related complaints – or around 900 each month.

As well, the new laws will mandate the creation of internal dispute resolution mechanisms – to be made available in-person, via phone or online – “that are accessible and transparent” for customers to register their complaints.

“The IDR [internal dispute resolution] obligation is intended to encourage the early resolution of complaints, including for compensation or other remedies to be provided to SPF consumers where there has been a breach of an SPF principle or SPF code obligation,” the Government wrote.

According to Locke, this will create a single ‘front door’ – where one does not already exist – for external dispute resolution for unresolved complaints.

Further, the Government will also move to establish a “coordinated intelligence sharing ecosystem” that will mandate timely reporting and information sharing across industry and government.

Australians have reported losses of nearly $160 million to scams so far this year, with the National Anti-Scams Centre receiving more than 164,000 separate scam reports in this time.

The vast majority of these losses, in dollar value, were the result of investment scams, which account for $94 million worth of losses, despite making up only around two per cent of scam reports.

“Australians are losing too much money to scams and while we’ve bucked the international trend where scams are doubling every year, losses are still far too much,” said financial services Minister Stephen Jones in a statement.

“The way to address that is to put strong obligations on the key businesses within the scam’s ecosystem,” he added.

 The Government has opened consultation on its proposed SPF, with submissions accepted until 4 October.