In March 2022, Australian Securities & Investments Commission (ASIC) published a response to submissions received to its consultation on review of the ePayments Code. In its response, ASIC proposed various revisions to the current voluntary code, including that scam payments will no longer be regarded as “mistaken internet payments” and reporting requirements for unauthorized transactions will change.
In more detail
The ePayments Code (Code) is a voluntary code of practice that regulates electronic payments including automatic teller machine (ATM) transactions, online payments, EFTPOS transactions, credit/debit card transactions and internet and mobile banking. ASIC is responsible for both administering and reviewing the Code.
The main objective of ASIC’s review is to clarify specific areas of the Code, and to modernize it. ASIC has made the proposal to extend the scope of the Code to New Payments Platform (NPP). In light of industry feedback, ASIC’s response is to extend the Code specifically to NPP and Bulk Electronic Clearing System (‘BECS‘), and will not make the Code to be platform neutral. While it is recognized this will reduce flexibility as new platforms emerge, it will prevent other frameworks from inadvertently being captured.
A significant change to the updated Code will also be the clarification that:
- the definition of ‘mistaken authorized internet payment’ will only cover mistakes in inputting the account identified and does not include payments made to a scammer; and
- ‘unauthorized transaction’ provisions will only apply where a third party has made a transaction on a consumer’s account without their consent, and does not apply where the consumer has made the transaction themselves.
The response to these clarifications in the Code has been diverse. While industry feedback supported these changes, consumer groups strongly opposed it and felt it would result in a decrease in consumer protection and a regulatory void in relation to scam losses. In response, ASIC intends to move forward and implement the proposal. The reasoning provided by ASIC is that the existing framework in the Code is not appropriate to deal with the complex and evolving problem of fraud and scams. While ASIC recognized that there is a gap in regulatory architecture relating to scams in Australia, it did not oppose regulations being created outside of the Code that are better equipped to achieve the best outcomes for consumers as a whole. At present, ASIC is prioritizing providing clarity to the Code and removing any ambiguities.
While a major recommendation has been for the Code to be mandated, the updated Code will remain voluntary. The Government intends to commence consultation on this issue later in 2022.
ASIC will engage with a range of key stakeholders in to the technical details of a draft updated Code. ASIC seeks to have an updated Code published in April 2022. There will be a 12 month transition period, however, subscribers will be encouraged to comply with the updated Code earlier if possible.
For further information, please see the response here.
This article was originally published in the March 2022 edition of LegalBytes, which can be found here.