Fintech Australia supports SPN — The government’s scam-prevention plan

Fintech Australia, the industry group for the local startup sector in the country, recently reviewed and decided to support the government’s proposals to implement scam-prevention measures for financial services companies.

Fintech Australia Approves Of The Government’s Anti-Scam Plan

As governments, security firms, financial institutions, and others around the world finally acknowledged the need to address the growing number of scams, new solutions finally started emerging. In Australia, the local government introduced a new way to address the matter in recent proposals.

The proposals include the implementation of a Scams Prevention Network (SPN), which is set to introduce a “whole-of-ecosystem” approach to reducing online financial scams by increasing obligations.

These obligations would be imposed on banks, telcos, and especially social media platforms, making them responsible for reimbursement of customers who were targeted by scammers, while also obligating them to take preventive steps.

The new bill is set to be introduced to the parliament this November. It comes after the losses to scammers and fraudsters kept piling up year after year, leading to Australian consumers losing over A$2.74 billion in 2023 alone.

Commenting on the mandatory codes, Assistant Treasurer Stephen Jones said that they will make Australia the toughest target in the world for scammers. He explained that there will be new obligations on social media platforms in the codes of practice which will make sure that they are confirming the identity of people who advertise on their platforms.

That way, criminals will have a difficult time publishing fake investment materials and tricking unsuspecting investors and traders. And, while this does put a certain burden on social media platforms, the large majority of scams globally have been traced to social networks, highlighting them as the place where bad actors primarily find and attract their targets.

Fintech Australia Provides Its Own Recommendations

While Fintech Australia approved the new measures, it also had certain recommendations of its own that it wanted to add. It pointed out that the government’s SPN will not solve the growing problem on its own.

Many have pointed out that this is a multi-sector issue and that it requires the collaboration of everyone in order to make a real impact and make it difficult on scammers, who were able to find alternative approaches in the past when only a single sector reacted.

Fintech Australia’s additional suggestions include using regulatory sandboxes for testing the SPF’s impact on some of the sectors, ensuring obligations are practical and proportionate to the consumer risk, and introducing a more precise definition of scams.

In general, Fintech Australia believes that more clarity is needed regarding how the anti-scam obligations would interact with other laws, like privacy laws and AML requirements.