SINGAPORE - Banks and financial institutions could still make goodwill payments to customers affected by scams, and the regulator has “leaned on the banks to be even more accommodative” in these payments, said Minister of State for Trade and Industry Alvin Tan in Parliament on Tuesday.
These discretionary goodwill payment frameworks for scam victims will complement the proposed Shared Responsibility Framework (SRF), which is intended to strengthen the direct accountability of financial institutions and telcos to consumers when they have breached their defined duties, he noted.
Mr Tan was responding to questions by Workers’ Party chair Sylvia Lim (Aljunied GRC) and Dr Tan Wu Meng (Jurong GRC) on the proposed SRF.
The SRF, which was initiated by the Monetary Authority of Singapore (MAS) and Infocomm Media Development Authority (IMDA), seeks to address losses arising from scams and how responsibility is apportioned among financial institutions, telcos and consumers in what is known as the “waterfall approach”.
However, there needs to be a balance between the responsibility of financial institutions and telcos, as well as consumers, Mr Tan said.
In addition, the framework “is not the only means through which scam victims can seek assistance”, he noted.
“Depending on the circumstances of each scam case, the sophistication of the scam typology, and the consumer’s financial situation, banks have covered part or all of the losses incurred by scam victims,” he added.
There is, however, a distinction between authorised and unauthorised transactions when it comes to determining who ultimately bears the responsibility for the loss under the proposed framework.
For scams that pertain to transactions authorised by the customer, the blame falls mostly on the customer.
In such instances, the approach is to raise awareness through public education efforts and public advisories so that customers exercise vigilance and take personal responsibility in guarding against the scammers’ attempts to gain their confidence.
“We also want to guard against the moral hazard risk,” he added, saying that this potentially included some customers who may be “working in cahoots with scammers to defraud the banks”.
If the customer was unaware of the transaction, “we place the responsibility on the financial institutions at the top of the waterfall, and the telcos at the second layer”, he said.
Separately, Ms Lim and Dr Tan also asked about the difficulties customers face when requesting physical tokens from the local banks.
Mr Tan replied that he will approach both the MAS and the banks “to smoothen the process out”.
He said that both the regulator and lenders should ensure that customers who need such tokens encounter less friction in requesting and receiving them, “particularly if they are not as adept, or they don’t yet have that confidence with digital tokens”.
Meanwhile, the consultation paper on the SRF will run until Dec 20. Mr Tan said that all the feedback will be reviewed at the end of the exercise, while MAS and IMDA plan to “operationalise” the framework by early next year.
He noted that because of the evolving and developing nature of malware scams, they had been excluded from this version of the framework.
However, these new scam variants will be included as part of subsequent updates of the framework. At the same time, other players within the ecosystem will eventually also be included in the scheme.
For now, the SRF’s focus is on phishing scams. The number has continued to rise in the first half of this year compared with the previous period, although it has declined as a proportion of total scam cases from 17 per cent to 13 per cent. Meanwhile, the average loss per phishing scam has also declined by 20 per cent.
“Besides assigning accountability for scam losses, the important point is the full implementation... should materially reduce the risk of phishing scams in the first instance,” said Mr Tan.
