8 months ago
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The biggest spike in complaints by bank customers related to concerns about fraud in 2023 comes amid a general rise in dissatisfaction with the level of service provided by banks, according to Bank of Jamaica’s most recent disclosures.
The “increasing trend in customer complaints” comes amid plans to improve customer service delivered by the eight commercial banks via the reshaping of the regulatory environment.
The banks have been warning their customers not to click on unfamiliar email links which can lead to phishing, or text messages which can lead to smishing. These are among the most common methods criminals use to inveigle customers to give up personal data and passwords. Gaining the passwords then allows the cybercrooks to empty accounts of their cash.
The BOJ said in its recently released annual report that the 147 complaints made in the ‘fraud and impropriety category’ reflected an increase of 227 per cent over the 45 reported for 2022. That spike was the highest.
Overall complaints about banks increased by two-thirds to 481. Trendwise, complaints are up fivefold since 2019, from 82 to 481.
The higher fraud complaints led to a slower pace of resolutions of the concerns, from three-quarters in 2022 to two-thirds in 2023. Fraud cases often involve police investigations, which take time to complete.
The issue of fraud remains topical as the BOJ extends its regulatory reach from overseeing banks to include non-bank financial companies. It will result in the BOJ having ‘twin peak’ oversight for all segments of the financial sector, inclusive of investment companies, insurance companies and banks.
The BOJ will become the ‘prudential’ supervisor or regulator, while the Financial Services Commission, FSC, will be responsible for market conduct and consumer protection oversight of the financial sector. The FSC’s current remit over securities dealers, insurers, and pension funds will fall to the central bank.
The changes will have to be legislated before they can take effect.
The BOJ has been cautioning banks about the threat of rising fraud, and they have responded with new investments in digital technology and security systems.
Heightened cybercrime risk
The central bank noted that the financial sector has increased its use of technology to cater to changes in customer needs. However, that usage in turn has heightened the risk of cybercrimes and fraud, both in the local and global economies, it stated.
“Going forward, the bank and local deposit-taking institutions must be proactive in safeguarding the integrity of digital assets and customer information,” stated the BOJ in its 2022 report.
In 2022, bank fraud totalled some $800 million, down from about $1 billion in 2021. The BOJ will disclose the size of bank fraud in 2023 in its pending Financial Stability Report that is published annually.
That move to increase oversight of fraud risk arose from the ongoing case of alleged fraud at Stocks & Securities Limited. The firm allegedly defrauded billions of dollars in client funds. This reportedly included US$6.2 million, or J$960 million, of funds belonging to celebrity sprinter Usain Bolt.
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