Media releases

Please attribute all comments to Nicola Sladden, Banking Ombudsman

Banking Ombudsman Scheme retains high levels of awareness

The Ministry of Business, Innovation and Employment has today released the results of a survey it conducts every two years to find out what New Zealanders know about their consumer rights and how to deal with consumer problems.  The survey has confirmed that the Banking Ombudsman Scheme is the second most well-known disputes service, after the Disputes Tribunal of New Zealand.

“We are very pleased that awareness of the Banking Ombudsman Scheme has remained so high,” said Banking Ombudsman Nicola Sladden. 

“It is critical that people know about us and find us easy to use. Of the financial dispute resolution schemes, our scheme was the most well-known by a significant margin.”

“We use range of strategies to ensure people are aware of our services and that they are easy to use.  We revamped our website in April 2018. We are the first hit on google if you search ”banking complaint”. We overhauled the website navigation and content (particularly quick guides and case notes) so that all information is in plain English to reach the widest possible audience. We also added three more languages through which our website can be accessed, bringing the total to 10.”

“Our social media presence has undergone a huge boost, principally to reach younger people. Our social media following has risen 81 per cent since 2016-17.”

“A real push for us has been reaching consumers who may not have known about us. Last year, we took part in regional hui with budgeting services through Fincap. Financial mentors, Citizens Advice Bureaux and other community services help connect vulnerable and disadvantaged members of the community to schemes such as ours, and to other important support services where needed.”

“We also increased our financial limit on 1 April 2019. The expansion from $200,000 to $350,000 will provide more people with access to justice through the scheme.”

“We want to ensure our dispute resolution service is available to as many bank customers as possible, ” said Ms Sladden.

The full New Zealand Consumer Survey 2018 report and supporting infographic can be found here.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

Banking Ombudsman Scheme to accept claims up to $350,000 from 1 April 2019

The Banking Ombudsman Scheme warmly welcomes an expansion of its remit which will mean customers can take claims of up to $350,000 to the scheme, from 1 April onwards. 

Banking Ombudsman Nicola Sladden said the expansion from $200,000 to $350,000 will provide more people with access to justice through the scheme.

“We want to ensure our dispute resolution service is available to as many bank customers as possible.

“Our $200,000 limit was based on the District Court’s limit, which rose to $350,000 in 2016, prompting us to review ours. Feedback from banks was very supportive, which was pleasing given the vital role we play in providing bank customers with access to free and independent redress.”

“This means more people will be able to get access to justice and have their complaints independently considered.”

The scheme will be able to award compensation of up to $350,000 for direct financial loss or damage, as well as up to $9,000 for inconvenience, stress or embarrassment.  Commerce and Consumer Affairs Minister Kris Faafoi has approved the change.

The expanded scope of the scheme comes at a time when banks are under increased scrutiny as a result of reviews by the Financial Markets Authority and the Reserve Bank of New Zealand, and the recommendations of the royal commission in Australia.

“The conduct and culture reviews in New Zealand and Australia highlight the importance of complaints as an indicator that conduct may be falling below community expectations.  People can, and should, come to us for an independent review when things go wrong”

“It is important people know about our scheme and can access our service when they need it. Our caseload is increasing year on year and we are resolving cases 25 per cent faster than we were five years ago.  The increase in our financial limit now adds to that momentum.”

“We also support the increased focus on transparency and fair consumer outcomes.  We are working on a dashboard that will pull together complaint data from banks to give a cross-industry view of the issues that cause complaints, and how widespread they are.  This will enable us to highlight opportunities for the industry to improve customer outcomes.”

ENDS

More information

The Banking Ombudsman Scheme is a free and independent service that helps people fix their banking problems. They look at what’s fair in the circumstances considering the law, codes and good industry practice.  All of the main banks are covered by the scheme. So are several credit unions and building societies.  You can get in touch with them for advice or information on 0800 805 950 or help@bankomb.org.nz or www.bankomb.org.nz.

Please attribute all comments to the Banking Ombudsman, Nicola Sladden

Banking Ombudsman supports greater focus on conduct and consumer outcomes

The Banking Ombudsman Scheme (BOS) welcomes the report into life insurer conduct and culture released by the Financial Markets Authority and the Reserve Bank today.

“We support the recommendations which will strengthen the management of conduct risks and improve the focus on good customer outcomes in the life insurance sector,” says Banking Ombudsman, Nicola Sladden.  

Some banks sell policies provided by their own insurance divisions, and other banks sell policies supplied by separate companies. BOS can consider all complaints about the selling process by banks, regardless of whether banks sold an internally or externally provided policy.

BOS can also consider complaints about the way a claim has been assessed, or the fact it has been declined, if the bank itself has provided the policy. If the complaint is about a claim on another company’s policy, BOS can put people in touch with the right dispute resolution scheme.

“We welcome the proposals in the report which focus on good conduct and good outcomes at every stage of the insurance process – from product design through to the sales process and issue remediation.”

“We will continue to work closely with the regulators and other dispute resolution schemes to address the issues that have been identified in the report”.

ENDS

More information

The Banking Ombudsman Scheme is a free and independent service that helps people fix their banking problems. They look at what’s fair in the circumstances considering the law, codes and good industry practice.  All of the main banks are covered by the scheme. So are several credit unions and building societies.  You can get in touch with them for advice or information on 0800 805 950 or help@bankomb.org.nz or www.bankomb.org.nz.

Please attribute all comments to Banking Ombudsman, Nicola Sladden

“We are very saddened to hear about the passing of Sir John Anderson” says Banking Ombudsman, Nicola Sladden. 

“The scheme owes much to the wisdom and vision of Sir John.  He was a driving force in establishing the Banking Ombudsman Scheme 26 years ago.

“He worked with consumer champions like David Russell to establish the scheme as a free and independent place for banking customers to bring their complaints.  This was well before it was a government requirement for banks to belong to such a scheme.

“Sir John was a founding board member for the scheme from 1992-2005.  He spoke about the scheme at its 20^th anniversary in 2012:

Within the Bankers’ Association, of which I was Chair at the time, there was serious consideration given to how all the bankers could support the scheme so it was effective in protecting the interests of customers and of banks.

Sir John was recognised for his huge contribution to the scheme at its 25^th anniversary last year (at 0.22 secs and 1:29secs) https://www.youtube.com/watch?v=R9hGjR1tCbE

“Kua hinga he tōtara i te wao nui a Tāne.

“We extend our heartfelt condolences to Sir John’s family.  A mighty tōtara has fallen.”

 ENDS

Please attribute all comments to the Banking Ombudsman, Nicola Sladden. 

New Zealand has seen an 15% increase in scams over the past calendar year, and we will have lost $70 million to scammers by Christmas, according to high level estimates from the Banking Ombudsman for Fraud Awareness Week (11-17 November).

“Some of the cases we’re seeing are just devastating – people are losing their lifetime savings.  I don’t think people realise the true extent of this epidemic,” says Banking Ombudsman, Nicola Sladden.                                                                                                                                                                     

“A lot of people know to be wary about the classic telco call saying there’s something wrong with your internet or your computer.  Or they know an email that is full of typos is likely to be a scam.

“But the scams are getting much more sophisticated than that now. 

“They’re not just hacking your phone or your computer – they’re hacking you and your human emotions.  They look for a way to play on your reactions so they can trick you into giving away your details or making a payment, or letting them have remote access to your computer. 

“They use different tactics to throw you off guard - fear you’ve put your computer security at risk, excitement that you’ve won a prize, tempting you with a good deal, or playing on the fact that you’re in a hurry and won’t suspect a fake invoice that looks like the one you were expecting.

“Think of how a pick pocket creates a distraction so you focus on that instead of the hand in your pocket.

“This is highly organized crime targeting ordinary smart people. We’ve seen people impacted right across the community.  “

Our role is to help people if they have any problems with their banking and they haven’t been able to sort it out with their bank. Banks are required to have appropriate security systems in place and inform customers about banking products and services.

“Banks are required to keep their banking systems secure. Bank systems can detect some unusual spending patterns and prevent attempts by fraudsters to access accounts. However, once a customer authorises a payment to a fraudster, it is usually gone. “

In one case seen by the Banking Ombudsman, the complainant met a man on an online dating site and all the signs indicated he was in Wellington. After talking to the complainant for two months, the man said he was going overseas to work as a mining engineer. When he arrived at his new job, he told the complainant his briefcase containing important documents and his laptop had been stolen.

The complainant bought and sent a laptop overseas.  The man then started requesting money because his New Zealand currency and cheques weren’t accepted by the local banks, each time promising that he would pay her back on his return to the country. The complainant sent almost $45,000 to the scammer in total. Because of the way the complainant had been groomed into making the payments, there were no red flags to alert the bank that the payments were unusual.

“Banks will always need to keep their systems secure but consumers and businesses also need to think of themselves as a first line of defence.  We all need to understand the types of threat posed by scammers, and the ways in which we can protect ourselves.”

As part of Fraud Awareness week, Kiwis are being urged to Stop & Think: is this for real?

• A genuine bank or organisation will never contact you to ask for your PIN, password or to move money to another account.
• Never click on a link in an unexpected email or text – you could be giving access to your personal and financial details.
• Always question uninvited approaches in case it is a scam. Instead, contact the company directly using a known email or phone number.
• Don’t assume an email or phone call is authentic – just because someone knows your basic details (name and address, or mother’s maiden name) it doesn’t mean they are genuine.
• Don’t be rushed into making a decision or financial transaction on the spot – a genuine bank or trusted organisation would never do this.
• Listen to your instincts – if something feels wrong then it generally is.

ENDS

More information

The Banking Ombudsman Scheme is a free and independent service that helps people fix their banking problems. They look at what’s fair in the circumstances considering the law, codes and good industry practice.  All of the main banks are covered by the scheme. So are several credit unions and building societies.  You can get in touch with them for advice or information on 0800 805 950  or  help@bankomb.org.nz  or  www.bankomb.org.nz.  You can submit a complaint online here.

Media queries to Nicola Sladden (021) 808 059 or Tina Mitchell (021) 254 4281.

Please attribute all comments to the Banking Ombudsman, Nicola Sladden. 

Banking Ombudsman Nicola Sladden says New Zealand customers are losing almost 15 per cent more to scammers than they did last year. Provisional data from the country’s banks suggests customers are on track to lose about $70 million in fraud-related scams this year.

However, Ms Sladden says $70 million is almost certainly just the tip of the iceberg.  “The true scale of the losses may never be known”.

“Some industry commentators estimate $500 million is probably a more accurate figure. A lot of scams go unreported, either because the amount is quite small, or embarrassingly large, or people feel there is nothing the banks or authorities can do to help them.”

“Banks are required to keep their banking systems secure. Bank systems can detect some unusual spending patterns and prevent attempts by fraudsters to access accounts. However, once a customer authorises a payment to a fraudster, it is usually gone. “

NetSafe is reporting scam losses that are almost five times higher than last year and that’s just from the scams that have been reported.  NetSafe data shows that between January and September 2018 almost 8,000 New Zealanders reported a scam to the organisation, with more than $24.7 million lost to scammers.

The Financial Intelligence Unit within the New Zealand Police estimate $27 million in scam losses over the last 18 months. Though this figure also doesn’t represent the true total, or all of the remitting agencies in New Zealand, as these scams are grossly unreported.

One recent such case involved 78-year-old Palmerston North woman Margaret Taylor. She got a call from a man, claiming to be from telecom company Slingshot, who said someone in Wellington was using her internet connection to download pornography. Margaret asked him some questions, and he gave convincing answers. He then pressured her to quickly cut off the so-called “intruder”. She agreed and began to divulge confidential information. It was only the arrival home of her tech-savvy flatmate Leanne Warr, who realised the man was hacking into her bank accounts, that saved the day.

Margaret is not alone.  Ms Sladden says the scam cases reported to the Banking Ombudsman have gone up 73% since last year (Jan-Sept). 

“More and more of the cases we’re seeing are absolutely devastating for the individuals concerned. Once it was rare to see someone lose $100,000, but not anymore.

“No one can afford to let down their guard for a moment – especially not older customers who are more often victims because of their lack of awareness about the internet, current scams and what to do when they get suspicious emails, calls and offers.”

The growing size of the problem has prompted the Banking Ombudsman Scheme to commission television and radio commercials highlighting simple steps to beat scammers at their own game. The campaign will be launched during Fraud Awareness Week, from 11-17 November.

The Banking Ombudsman, Netsafe and the NZ Police are all supporting Fraud Awareness Week (11-17 November) which is led by the Consumer Protection team within the Ministry of Business, Innovation and Employment (MBIE).  A wide range of public and private sector organisations are supporting it this year.

“New Zealanders are losing too much money to scams each year,” says Detective Superintendent Iain Chapman, National Manager of the Police Financial Crime Group. “By far the best chance we have of getting your money back is by helping you not to lose it in the first place.

“The reality is that despite the combined efforts of all agencies involved in financial crime in New Zealand, there are significant challenges identifying and prosecuting overseas offenders involved in online scams. This is further made worse by the fact that international funds transfers can take a matter of minutes.

“If you have family members who are not technologically savvy, now is the time to talk to them about staying safe online.”

“This year for Fraud Awareness Week Kiwis are being urged to Stop & Think: is this for real?” says Mark Hollingsworth, Manager Consumer Protection (MBIE).  “In the same way that we all know to ‘drop, cover, hold’, we want people to automatically question unexpected calls and emails.

“The message is simple, if you get any online contact from anyone you don’t know, or asked for personal or financial information from anyone, including banks and government departments – be suspicious before doing anything else - stop and think.”

“Always question uninvited approaches in case it is a scam. Instead, contact the company directly using a known email or phone number” says Nicola Sladden

The key message for Fraud Awareness Week is Stop & Think: is this for real?

• A genuine bank or organisation will never contact you to ask for your PIN, password or to move money to another account.
• Never click on a link in an unexpected email or text – you could be giving access to your personal and financial details.
• Always question uninvited approaches in case it is a scam. Instead, contact the company directly using a known email or phone number.
• Don’t assume an email or phone call is authentic – just because someone knows your basic details (name and address, or mother’s maiden name) it doesn’t mean they are genuine.
• Don’t be rushed into making a decision or financial transaction on the spot – a genuine bank or trusted organisation would never do this.
• Listen to your instincts – if something feels wrong then it generally is.

Visit the scamwatch page for more information on how you can prevent yourself, family and friends from being scammed.

ENDS

Media interviews

The following people are available for media interviews:

Interviewees available:

• Nicola Sladden, Banking Ombudsman (can speak to increase in cases and impact on everyday Kiwis) – 021 808 059
• Iain Chapman, National Manager: Financial Crime Group, NZ Police (can speak to statistics and scammers’ methodology) – 021 19 06494
• Mark Hollingsworth, Manager Consumer Protection (can speak on Fraud Awareness Week, the agencies joining forces to support it, and what consumers can do to protect themselves) – 029 771 0085

About Fraud Awareness Week www.scamwatch.govt.nz

Fraud Awareness Week is an annual campaign that has been running for five years and coordinated by Consumer Protection. It is a cross-government initiative aiming to get people to recognise scams before they happen. During the week of 11-17 November organisations involved will be sharing real scam examples. The theme for the campaign is: Stop and think. Is this for real?

Fraud Awareness Week is supported by:

• Banking Ombudsman
• CERT NZ
• Commerce Commission
• Commission for Financial Capability
• Department of Internal Affairs
• Department of Prime Minister and Cabinet
• Financial Markets Authority
• Ministry of Business, Innovation and Employment
• Netsafe
• New Zealand Bankers Association
• New Zealand Police
• New Zealand Telecommunications Forum
• Serious Fraud Office

About the Banking Ombudsman Scheme

The Banking Ombudsman Scheme is a free and independent service that has been helping people sort out problems with their banks for more than 25 years. They resolve disputes fairly and quickly, and prevent them from happening in the first place, to make banking better for all New Zealanders.

Please attribute all comments to the Banking Ombudsman, Nicola Sladden

Banking Ombudsman supports greater focus on consumer outcomes

The Banking Ombudsman Scheme welcomes the report into bank conduct and culture released by the Financial Markets Authority and the Reserve Bank today.

“We support its proposals to strengthen the current framework to focus on good customer outcomes,” says Banking Ombudsman, Nicola Sladden.  

“We were pleased the review found a high level of awareness of bank complaint processes amongst those surveyed.

“We agree with the recommendation that banks review their customer complaint processes, particularly to better define and record customer complaints and to ensure it is easy for customers to raise concerns.

“We have already begun a suite of initiatives to enhance our oversight of banks’ complaint processes. This is so we can be assured customers are having their concerns appropriately addressed at every level.

“Together, these initiatives will enable us to promote consistently high standards across the sector.

“We will continue to work closely with the regulators and the New Zealand Bankers’ Association to implement the recommendations to address the issues they have identified.

“A strong complaints framework is an essential element in a fair banking sector.” 

ENDS

More information

The Banking Ombudsman Scheme is a free and independent service that helps people fix their banking problems. They look at what’s fair in the circumstances considering the law, codes and good industry practice.  All of the main banks are covered by the scheme. So are several credit unions and building societies.  You can get in touch with them for advice or information on 0800 805 950 or help@bankomb.org.nz or www.bankomb.org.nz.

Money Week is all about helping New Zealanders get ready for life’s unexpected twists and turns. One of our cases shows the importance of staying vigilant about safeguarding your future.

Kiri, who was in her 80s, met with one of her bank’s financial advisers to simplify her affairs. Kiri knew what she wanted - a low-risk, accessible investment that offered returns competitive with equivalent term deposits in order to supplement her superannuation. She also wanted to invest for less than three years, and for the bank to manage the investment.

The adviser recommended she consolidate her term deposits as they matured and add the principal on maturity to a New Zealand-based low-risk managed mortgage trust. For the next four months, Kiri invested her matured term deposits in the mortgage fund.

Two years later, Kiri discovered she was receiving a rate of return of 2 per cent a year. She complained to the bank that she would have been better off keeping her term deposits. She sought the difference in returns between the mortgage trust and term deposits.

We considered whether the mortgage trust was an appropriate product and concluded it broadly met her brief to the bank. However, we considered the mortgage trust was right for only 20 per cent of her portfolio, in what was otherwise a well-diversified portfolio. We also considered the mortgage trust should have been regularly monitored.

We considered the bank should not have recommended Kiri move all of her money from term deposits into the mortgage trust because:

• term deposits are stable investments, and she had no previous experience of investments where the value could fluctuate
• she was a relatively unsophisticated investor and relied heavily on advice
• the extra risks were not clearly explained
• the mortgage trust investment was sold without any regular monitoring process, meaning she wouldn’t know of any decline in its value and return until it affected her standard of living.

We recommended the bank compensate Kiri for the difference between what she would have received from a 20 per cent investment in the trust and what she actually received. Kiri took the compensation. She later sold her investment in the mortgage trust and reinvested the proceeds in term deposits.

Planning for your financial future can be overwhelming. If you seek financial advice, shop around until you find an adviser who takes the time to understand your financial situation and goals. Make sure the product they are recommending fits with what you need, now and into the future.

ENDS

Please attribute all comments to Nicola Sladden, Banking Ombudsman

We’ve seen a recent surge in invoice scams in our cases, and banks are also reporting an increase.

A Business Email Compromise scam (or invoice scam) is where scammers hack into an email system so they can email people an invoice, imitating legitimate businesses.  The logo looks the same, but the numbers are different on the account.  Or the scammer imitates the email address of a legitimate business, transposing one or two characters.  People are busy and don’t expect to have to check these sorts of details.

“Scammers use our haste to their advantage” says Banking Ombudsman, Nicola Sladden.

Law firms and real estate agents seem to be the most common targets.

The New Zealand Law Society reported at the end of last year that invoice scams were likely affecting law firms, after similar attacks were reported in Queensland.  Fraudsters obtain access to law firm email accounts, then use these to email clients misdirecting trust money or settlement funds.  Conveyancing transactions were particularly popular.

Similar stories have been shared by real estate companies where home buyers mistakenly pay their deposit to a scammer.  These are large sums of money and have devastating consequences for the victims.

Our advice to anyone about to pay over a sum of money is to stop and check, especially if you have not made a payment to that account before.  Ring your lawyer or your real estate agent on a number you know is legitimate to double check the bank account number you are paying into. 

“This is definitely a case where an ounce of prevention is worth a pound of cure” says Banking Ombudsman, Nicola Sladden.

If you think you may have been scammed, contact your bank as soon as you can.   There’s no guarantee that the funds can be recouped, but the sooner you contact the bank, the better the chances of recovery.

Our role is to help people if they have any problems with their banking and they haven’t been able to sort it out with their bank.  Banks are required to have appropriate security systems in place and to educate their customers about banking. 

You can read our Quick Guide on common scams here.

You can continue to keep up to date on the latest scam alerts through our colleagues at:

https://www.netsafe.org.nz/advice/scams/

https://www.cert.govt.nz/businesses-and-individuals/recent-threats/

https://www.consumerprotection.govt.nz/general-help/scamwatch/identify-a-scam/

We’ve seen more scam cases over the last 12 months, and they’re becoming more sophisticated. 

Most people can tell you about a time they’ve had a phone call or email trying to trick them into handing over their bank account details.  Or even a request to help a Nigerian prince receive his inheritance.  And it becomes the butt of a joke…those guys are so obvious - how do people fall for that?

“Scammers are highly sophisticated.  The new breed are masters of manipulation. They use fear to their advantage.” says Banking Ombudsman Nicola Sladden.

Scammers says things like - you’ve done something to your computer and people are hacking into it.  Someone has downloaded a game using your wifi and now your system has a virus.  You owe money to Inland Revenue.  

“Scammers are now far more creative in finding new ways to engage and groom their victims.  Accessing your banking details doesn’t come until much later, often hours down the track.  But the end game is the same – by distracting you with terrible news, scammers quickly move on to how they can help ‘fix things’, gambling on the fact you won’t stop to check anything until it’s too late.”

Or the distraction may come in the form of good news.  You’ve won a prize.  You’ve been selected for a holiday.  I’ve seen your profile online and I want to get in touch, but my subscription is about to end – email me!

Over the last financial year, we’ve seen a 37 per cent increase in scam cases.  That’s a significant step up. The losses are more than you would expect – often tens of thousands of dollars. Sometimes hundreds of thousands.  And the impact isn’t just financial.  We talk to victims every day who are too stressed and embarrassed to tell their families.  Others don’t even want to give us their names. 

Our advice to anyone about to click on a link or accept ‘help’ over the phone is to stop and check.  Are you being manipulated?

Our role is to help people if they have any problems with their banking and they haven’t been able to sort it out with their bank.  Banks are required to have appropriate security systems in place and to educate their customers about banking.  They’ll also cover losses for fraud in accordance with the Code of Banking Practice.

When we saw that scam cases were increasing this year, we decided to tackle the issues head on. We were part of interagency fraud forums in November 2017 and February 2018 which brought together various experts to share knowledge and brainstorm solutions.

We had a sense from our own cases and research that seniors were losing the most.  So we have made a concerted effort over the last six months to connect with government, industry and consumer organisations with a focus on seniors, especially Age Concern, Grey Power, Rotary and U3A, to share the lessons from our cases.  We have also engaged with the telecommunications industry to explore opportunities to combine education messages.

With Fraud Awareness Week on the horizon later this year in November, we are leading a tv campaign to raise awareness about fraud.

“As a country we don’t talk about this enough.  We need to get scam-savvy and fight back.”

You can read our Quick Guide on common scams here.

In the meantime, continue to keep up to date on the latest scam alerts through our colleagues at:

www.netsafe.org.nz/advice/scams

www.cert.govt.nz/businesses-and-individuals/recent-threats

www.consumerprotection.govt.nz/general-help/scamwatch/identify-a-scam

The Banking Ombudsman Scheme has released its summary annual report detailing another successful year.

“As we enter the second year of our 2017-2020 strategic plan we are really seeing the benefits of preventative model of dispute resolution come to life,” says Banking Ombudsman Nicola Sladden.

“There has been an increase in cases and timeliness, strengthened communications and stakeholder engagement, together with a drop in disputes. We are providing information and guidance to complainants and banks to empower them to resolve their disputes early on, thereby reducing overall dispute numbers.”  

The scheme’s overall caseload increased by 14 per cent while dispute numbers decreased, indicating the early resolution service is working as intended.

Customer satisfaction remains high at 80 per cent. “Our working day count and timeliness performance have significantly improved.” The scheme resolved 97 per cent of its complaints within two days and improved its dispute resolution timeframes by 11 per cent.

“The scheme is successful because we can give customers fair outcomes that are more flexible than the courts.” This year 8 per cent more outcomes were favourable to customers compared with last year.

“We have continued to make an impact by sharing more lessons from our cases, strengthening our consumer and industry engagement, and engaging in a large number of policy initiatives to share a consumer perspective.”

In addition to the scheme’s resolution function, the prevention team have focused on raising awareness and accessibility of the scheme. 

Based on MBIE’s two-yearly consumer awareness survey, the Banking Ombudsman Scheme is the most well-known financial dispute resolution scheme in New Zealand. “Over the last year our awareness activities have focused on audiences who may not have known about us through our usual channels.” This year the scheme launched an Instagram page, @ombuddies, targeted at youth.

“In terms of accessibility, we continued to make our service and our educational information more accessible and easier to use by putting all of our content into plain English.”

The scheme also invested in a new website which has better search functionality and is easier to navigate. Since its launch in mid-April more people are using online channels to submit their complaints and there has been a good uptake on live webchat.

The annual report can be read here.

The New Zealand Bankers’ Association has today published the sixth edition of the Code of Banking Practice.  The sixth edition adopts a principles-based approach which the Banking Ombudsman Scheme (BOS) supports. 

The code is a high-level statement of what customers can expect from their banks.  It sets out the principles of good banking practice and sits above the detail that is contained in each bank’s terms and conditions.

In our view it makes sense for the code to be expressed as principles of customer commitment.  These are promises to the customer from the banks that should remain ‘evergreen’, regardless of what new technologies and products emerge on the banking landscape.  It gives BOS more flexibility in determining what good banking practice is and how banks should conduct themselves.

A principles-based approach also makes the Code more accessible to customers. If codes of practice are too prescriptive and detailed, the message for customers on what their rights are can also get lost in the detail.  We want customers to be informed and empowered to apply their rights.

There is no change to the existing consumer protections in the sixth edition of the code, rather the intention is to give more flexibility in determining what good banking practice is and how the banks should conduct themselves. 

Fraud liability

In our submissions on the draft code, we strongly supported retaining a clear statement about the reimbursement of genuine victims of fraud.  We submitted that an express commitment to this principle was appropriate to ensure consumer protection.  We are pleased that commitment has been retained. The response from NZBA to our submission is attached.

The clause enables victims of card and electronic banking fraud to be reimbursed for losses (to the extent the customer has not acted fraudulently or negligently or caused or contributed to the loss by breaching the terms and conditions).

Our data indicates an increase in scams occurring in New Zealand. We have seen a 38% increase in fraud related cases so far this financial year (compared to the same period last year).  We regularly share insights with the banks about the cases we are seeing.

We are also concerned about the broader impact this increase in scams is having on New Zealanders, not only in terms of financial losses, but also in terms of stress and emotional impact, and the loss of trust in core services.  We know from the CERT NZ data released this week that 87% of losses impact New Zealanders aged over 55.  We are therefore taking the initiative to ensure key messages get through.  We are working with the industry to lead a fraud prevention campaign to raise awareness about avoiding scams and exploring opportunities for joint initiatives with the telecommunications industry.

Attachment(s): Letter from NZBA May 2018

ENDS

Media contact: Nicola Sladden 021 808 059

Please attribute all comments to the Banking Ombudsman, Nicola Sladden

Banking Ombudsman Nicola Sladden said the Banking Ombudsman Scheme had received a spate of complaints from individuals seeking to recoup credit card payments made to binary options trading sites.

Binary options trading is high risk, so people need to take extra care before investing. 

Binary options trading involves speculating on whether stocks or currencies will rise or fall. On-line platforms may not be regulated, which means there is a higher risk the investment is a scam.

"Bank customers complain to us that banks won't arrange the return of the money. But the fact is, banks can't do that because the transactions were authorised by the individuals themselves.

"The payment process was perfectly correct. It was the investment that was unsound, and banks cannot be held to account for that.

"It's a case of buyer beware."

Ms Sladden said complainants argued that banks should charge back the transactions to the options trader's bank, so that it could in turn debit the trader's account.

Chargeback arrangements, rights and timeframes are explained in the card company's rules.

"Cardholders can ask for a chargeback, but they have no automatic right to one. It is industry practice to charge back disputed transactions if there is a valid reason, but making a poor investment decision is not one of them. People need to think carefully before giving merchants their credit card details online - and hence permission to bill them."

Valid reasons for a chargeback include such things as an unauthorised transaction, a failure to receive the goods or service, defective or incorrectly described goods or services, and a duplicated or wrongly charged transaction.

The Financial Markets Authority describes binary options trading as "very high risk, even for experienced investors", adding that "there's a very high chance you'll lose money". The authority says slick, high-pressure marketing techniques make such trading look much easier and safer than it really is.

Ms Sladden said some bank customers had authorised transactions totalling tens of thousands of dollars. Frequently they were unaware they had committed to making a certain number of trades before they could withdraw their money.

"Most of these trading companies are overseas, and some individuals end up trading without understanding the risks involved."

See the scheme's quick guide to credit and debit card transaction chargebacks for information on credit card payment complaints about online services such as betting and binary options trading.

Ends