Due Diligence Checks by Banks and Safeguards Such As Deduction Limits for GIRO Transactions

Mr Shawn Loh asked the Prime Minister and Minister for Finance in addition to the limits-per-transaction for GIRO deductions and safeguards against scams, whether MAS will consider requiring banks to allow customers to set optional limits on the number or cumulative amount of deductions per billing period for individual GIRO arrangements, so as to improve customer control against bad actors or technical failure in company payment systems.

Mr Melvin Yong Yik Chye asked the Prime Minister and Minister for Finance whether the Government can provide information on (a) what due diligence checks are banks required to conduct when onboarding a corporate customer for GIRO billing; and (b) whether banks are required to have suspicious transactions alerts when a billing organisation deducts multiple GIRO transactions from a customer in a short time span.

Sir, there are existing safeguards for the General Interbank Recurring Order (GIRO). Customers can set transaction limits on their GIRO payments. And banks also apply due diligence checks on GIRO billing organisations. These include checking that they are properly registered businesses and are not linked to any sanctioned or other criminal activities.

However, checks by banks may not always be able to prevent errors and potential misuse of GIRO. While such cases have been uncommon so far, we agree that the safeguards should be strengthened.

The Monetary Authority of Singapore (MAS) is working with the Association of Banks in Singapore and member banks to strengthen safeguards. The review will consider measures including enabling customers to set monthly limits on the value and number of transactions and enhancing transaction monitoring and due diligence on billing organisations.

We will also consider suggestions by Ms Gho Sze Kee, Mr Melvin Yong and Mr Shawn Loh, and members of the public.

We also advise consumers to review their current GIRO arrangements and to set appropriate transaction limits with their banks and financial institutions.

There are also other non-GIRO payment options available to consumers including standing instructions to the bank for recurring monthly payments for an amount set by the customer.

I have one supplementary question. In the United Kingdom, the Bankers Automated Clearing Services operates widely used direct debit scheme that includes advance notice of payment amounts, a direct debit guarantee, allowing for immediate refunds in case of error and strong consumer recourse mechanisms.

So, in light of these established safeguards in other countries, could the Minister of State clarify whether Singapore's review of the GIRO framework would move towards incorporating such similar features?

Sir, I thank Ms Gho Sze Kee for her suggestion. Indeed, we will look into her suggestion and others as well.

I would say also that now, some of the banks have, for example, GIRO on-demand, where each deduction must be authorised individually before the bank processes the transaction. So, different banks have different ways either to implement safeguards or have different safeguards. But we will look into that suggestion. We will look into also setting monthly limits for transaction amounts and also, the value of transactions, and then, also, to enhance monitoring of transactions.

Thank you, Mr Speaker. I thank the Minister of State for the update. I am very heartened to hear it, that MAS has agreed to do a review because the current level of consumer protections are not adequate.

I have two questions. The first one is how long will this review take?

And my second question is, while the review is ongoing, can MAS also increase public awareness of the protections offered to consumers, as well as the limitations? So, today, you can only set a limit per transaction, but consumers are not protected because agencies or organisations can have multiple deductions within that transaction limit. So, can public awareness be increased prior to the review being completed?

Sir, indeed, MAS will work with the banks, as well as financial institutions to raise awareness and public awareness of these. And in the review, we will start with lower-hanging fruits. Some of these may be effected in the short term, but major enhancements which involve system changes will need some time to be developed, tested and implemented. But we accept and we will take his views into account.

Sir, I thank the Minister of State for his reply, and we are heartened. The Consumer Association of Singapore (CASE) will be happy to work with MAS on consumer protection measures.

For consumers, we often use GIRO when we want to so call, "set and forget", recurring payments. And therefore, we acknowledge that while there is convenience of using GIRO, it also comes with trade-off, including the possibility of fraud. Many consumers regard GIRO as a secure and convenient means of payment, and therefore, we must put in place the necessary safeguards.

I want to ask whether there are existing thresholds or guidelines for banks to therefore flag anomalous GIRO deduction patterns? If not, whether MAS intends to introduce such standards for the banks? Because when we do GIRO, we forget about it and we expect that the banks protect us by monitoring certain patterns.

Sir, I thank the CASE Chairman and Member Mr Melvin Yong for working with MAS to also raise awareness about the use of GIRO.

As he mentioned earlier on, GIRO has its uses. For example, if you were to pay your monthly electricity bills, this affords convenience, because the bills will fluctuate from month to month. But there are also some downsides, and that is why this review will take into account what he, Ms Gho and Mr Shawn Loh have suggested, and that includes also enhance monitoring of transactions as well.