This article was co-authored with Masooma Saberi and Hasan Mohammad.
Scams are a global phenomenon and no business is immune. In addition to reputational damage and a likely increase in customer complaints, the borderless nature of scams poses a material risk to businesses, including a compromise of customer personal information, cybersecurity threats, financial crime, regulatory investigations and financial penalties.
Scammers operate on an international scale and are increasingly sophisticated. These risks have become more pronounced, particularly where they are intertwined with domestic and global regulatory obligations which are enforced by multiple regulators.
Scams prevention framework
The Australian Government released the Scams Prevention Framework (Framework) for public consultation last week. The proposed Framework represents a multi-faceted approach which seeks to enshrine several important principles in legislation, placing various requirements on regulated sectors (which may include the banking, insurance and telecommunications sectors).
The proposed changes require a holistic, coordinated approach from across the business to address each of the pillars of the Framework:
- Regulated entities will be required to uplift their governance arrangements relating to scams and be transparent in publishing publicly information about its measures to protect consumers from scams and consumer rights (including the right to make a complaint).
- Requirements to take reasonable steps to prevent, detect, and disrupt scams.
- Regulated entities are also required to share intelligence with the Australian Competition and Consumer Commission. In addition, they must have an accessible mechanism for consumers to report scams, supported by an accessible and transparent internal dispute resolution framework and through membership of an authorised external dispute resolution scheme.
- Global businesses are also recommended to familiarise themselves with these changes as there is a proposal to extend to acts, omissions, matters and things outside Australia.
The draft legislation implementing the Framework and its explanatory materials are available here. Submissions in respect of the proposed Framework will close on 4 October 2024. We will be publishing more analysis in the coming weeks.
Plan ahead
We have reduced the various intersecting regulatory obligations connected to scams to a single slide. Some of these will not apply to you; but many will. The services we can offer are included in the slide.
Download Scams - Risk & regulatory overview
It is crucial not to wait until your business processes are targeted by scammers. Businesses must act now to establish robust measures to guard against any third-party attempts to scam their customers. If you wish to discuss your risk profile or conduct a health check on your processes, please reach out to our experts in risk management, compliance, and investigations.
