An Overview of Australia’s Scams Prevention Framework
As of 31 March 2027, the Scams Prevention Framework (SPF) will impose new codified obligations on banks in Australia. This unprecedented national-level regulatory regime is backed by federal legislation, solidifying Australia’s commitment to curb fraudulent activities in the digital age.
On the previous Thursday, Ministers Daniel Mulino and Anika Wells announced the expected sector designations which include banks, telcos, and digital platforms, including social media and search engines. The ministers expressed their concerns over the increasing financial and psychological impact of scams on Australians, emphasizing the necessity of a stronger, coordinated approach to counter this menace.
Details of the SPF
The SPF requires banks to take stronger action to prevent, detect, and disrupt scams. This will include implementing systems to provide clear pathways for consumers to report incidents and resolve complaints. The Treasury has released for consultation draft industry codes, explanatory statements, draft rules, and a discussion paper on internal dispute resolution. An online information session was held on Friday, 5 June to discuss these issues, and feedback was due by Thursday, 25 June.
The SPF encompasses enforceable sector rules and intelligence sharing. The Australian Competition & Consumer Commission (ACCC) has been empowered to investigate potential breaches and take enforcement action. Fines of up to $50 million can be imposed on entities not taking reasonable steps to fulfill their obligations.
Criticisms and Controversies Surrounding the SPF
Despite the well-understood goal of the SPF to protect consumers from scam activities, the introduction of the legislation has been met with both applause and criticism. The controversy primarily revolves around three areas: the perverse incentive of victim compensation, how “shared” liability will be quantified and apportioned among designated entities, and whether the SPF is doing enough to stop scams from occurring in the first place.
Views from Industry Insiders
Simon Birmingham, the CEO of the Australian Banking Association (ABA), stated that the most crucial policy objective of the SPF should be to prevent scam losses from occurring in the first place. He welcomed the obligations that would require other sectors to identify their customers, similar to the existing expectations for banks. Birmingham also raised concerns about the high percentage of scam losses coming from individuals losing more than $5000, and he urged for the SPF to focus on preventing these high-value losses.
Birmingham also suggested that compensation should be tied to SPF code breaches by designated businesses, not simply shuffling losses around the economy and incentivising scammers to target low-value opportunities. He further called for the extension of the SPF to other sectors, such as dating apps and crypto platforms, to make it harder for global scam networks to operate in Australia.
Emphasising Scam Prevention
The ABA has urged banks to remain focused on an ecosystem approach with scam prevention at the forefront. This would include efforts to encourage consumers to take sensible steps to avoid being scammed and flagging high-risk payments. The designated entities, including banks, will need to have clear complaint pathways for internal dispute resolution and must also be members of the Australian Financial Complaints Authority (AFCA).
AFCA is already scaling up its resources, adding full-time hires, and appointing consumers and industry experts as panel members who can assist with complex matters. AFCA membership applications will open from 1 July 2026 for designated entities.
The Need for a Dynamic Approach to Scam Prevention
Kuan Chia, a scam prevention expert and AFCA panel member, emphasised the need for dynamic controls to detect anomalies. He noted that criminals are increasingly harnessing technology to scale up and sophisticate their scams, posing a significant threat to the community. Chia stressed that regulated entities must leverage technology and play their roles to protect the community, given that billions have been spent fighting financial crime, yet the issue continues to rise.
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