An update to the Code of Banking Practice introducing new scam protections and a strengthened compensation framework for customers will take effect on 30th November, as New Zealand’s retail banks move to counter increasingly sophisticated criminal activity.
The update brings in five new scam protection commitments, including pre-transaction warnings for certain payments, real-time monitoring of high-risk transactions, and the ability for banks to delay or block payments where suspicious activity is detected.
Customers will also have access to a 24/7 reporting channel if they believe they have been scammed, with banks required to respond immediately to protect affected accounts.
A key protection is the Confirmation of Payee service, which allows customers to check whether the account name matches the number they are paying.
The system was fully rolled out in April and is now a core safeguard against authorised payment scams, where people are tricked into sending money to criminals.
Banks will also continue sharing scammer account information with each other through new intelligence technology, enabling faster freezing of funds before they can be moved offshore. This approach was announced earlier in the month and is already helping to recover or prevent significant losses.
Where a bank fails to meet the new scam protection commitments, it will be required to compensate eligible customers for all or part of their loss.
Banks will also continue to compensate customers whose banking is accessed without their authority.
New Zealand Banking Association chief executive Roger Beaumont said the strengthened protections underline the industry’s commitment to customer safety.
“The five new scam protection commitments in the updated Code of Banking Practice show that our banks are serious about helping to keep their customers safe from increasingly sophisticated scams. They’ve invested heavily in this,” he said.
Beaumont added that prevention remains the most effective strategy. “We have adopted a prevention-led approach to fighting scams because global experience shows that’s the best way to help protect consumers from scam losses.”
He said the new compensation approach reflects shared responsibilities across the wider ecosystem.
“Banks have stepped up their customer protections and will be accountable for those measures, but they cannot take on full liability for scam losses that are beyond their control and may start with a fake ad or chat on social media, or a fake search engine result.
“Industries such as social media companies, global tech platforms, and telcos also have a major role to play in preventing scams. Consumers are also encouraged to take reasonable care to protect their banking,” Beaumont said.