KUALA LUMPUR — Banks can do more to prevent their customers from falling victim to scams as they have the means and the backing of existing laws to do so, Malaysian Communication and Multimedia Commission (MCMC) commissioner Derek Fernandez said.
They can begin to take appropriate measures, even as the government mulls introducing laws similar to provisions in the UK which recently approved legislation to compel banks to compensate financial fraud victims, he told Scoop.
“There are sufficient powers in the Financial Services Act to ensure that customers’ cybersecurity is an essential condition of a financial services licence.
“This condition can carry serious penalties and compensation to victims of scams, should banking organisations be at fault in failing to take reasonable care to protect their customers,” said Fernandez who is MCMC’s Online Harms and Information Security Committee Chairman.
“This means investing a fair amount of money into cybersecurity protection for customers. This is not unreasonable judging from the huge profit made from digital banking and payment systems.”
Banks can also improve operating standards, time frames, refund processes, public engagement timelines and customer support resources, he added, as there is much frustration among the public over the efficiency and responsiveness of customer support when faced with fraud cases.
Fernandez was commenting on Prime Minister Datuk Seri Anwar Ibrahim’s agreement in principle of UK laws to compel banks to compensate customers who fall victim to financial fraud, if the institutions are found to have been negligent.
Anwar, who spoke in the Dewan Rakyat yesterday, said Putrajaya is studying similar laws, after the UK on Oct 7 enforced new mandatory reimbursement rules requiring banks to refund fraud victims up to £85,000 within five days from the transaction in question.
Fernandez welcomed the prime minister’s remarks that Malaysia would consider similar laws, adding that it is time financial service providers, as well as telecommunication services, go beyond holding anti-scam campaigns.
“While these are very helpful and useful, the emphasis for service providers should also be not to allow people to get scammed in the first place,” he said.
“This goes to the heart of modern cybersecurity regulatory policy, which in my opinion is that those who profit the most from digitalisation owe the greatest responsibility to ensure public safety when accessing their platforms.”
On the possibility of Malaysia adopting regulations similar to the UK’s on compensating bank fraud victims, Fernandez called for consistency, saying that if it is reasonable for banks to be responsible for money physically deposited in the bank, the same legal responsibility must be applied “in the virtual world”.
“Sadly, different laws seems to apply with respect to legal responsibility in the virtual world as it does in the physical world, and that is the heart of the problem. It appears digitalisation can be used increase profit and pass unreasonable risks to the customer, unless properly regulated.”
He said this showed that the self-regulation expected of essential services “is not working”, requiring the government to step into protect consumers.
Yesterday, Anwar when speaking on the UK rules, said a committee chaired by the Treasury secretary-general will be studying the mandatory compensation regulations. – December 5, 2024