Ensuring Fair and Accessible Dispute Resolution Processes for Unauthorised Banking Transactions for Consumers Without Legal or Financial Expertise

Ms Denise Phua Lay Peng asked the Prime Minister and Minister for Finance (a) how does MAS ensure that the dispute resolution processes for unauthorised banking transactions are accessible and fair to consumers without legal or financial expertise; (b) whether clearer guidance and assistance can be provided to this group of consumers; and (c) whether banks should bear a greater burden of proving adequate fraud-prevention safeguards before liability is assigned to such consumers.

Mr Speaker, the Monetary Authority of Singapore (MAS) requires banks to provide clear channels for customers to report unauthorised transactions and to handle such disputes in a fair manner. This includes promptly commencing investigations and pending the outcome, not requiring customers to pay for the disputed transaction and its related charges. Banks are expected to clearly explain to customers how liability has been assessed.

Payment card schemes also have established rules to protect customers. Customers who promptly raise disputes with their card issuers will generally not be liable for unauthorised transactions with merchants that do not enable the 3-D Secure (3DS) protocol. Instead, the merchant involved will be liable for the loss.

If customers were assessed to be responsible for the loss following investigations, banks may offer goodwill payments to customers taking into account the circumstances of each case, including the customer's financial situation and whether they come from vulnerable backgrounds.

Sir, where customers disagree with a bank's assessment on liability, they can escalate the matter to the Financial Industry Disputes Resolution Centre which offers an independent and affordable avenue for dispute resolution without the need for legal representation.

Ms Phua.

I thank the Minister for the answer, and I do agree that the Ministry of Home Affairs Bill yesterday was of great help and that FIs are indeed our partners. Especially that they do lean forward to our residents who are especially vulnerable.

But I just want to read an extract from a resident of mine who has no access to pro bono services because he is not poor enough or low-income enough, and this is what he said: "When I became a victim of fraud. I naively assumed that the facts would speak for themselves. I did not authorise the transactions, did not click on any phishing links, did not disclose any OTPs, and reported the matter immediately upon discovering the fraud. I thought that would be enough. Instead, I discovered that an ordinary consumer is expected to navigate a very complex web of banking regulations, contractual terms and legal arguments simply to protect their rights."

He said, "Throughout this process, I have had to review pages of submissions and banking documents, understand banking regulations and liability frameworks, interpret terms and conditions, prepare legal and factual submissions, and respond to arguments made by large financial institutions with access to legal compliance and fraud specialists. I subsequently realised that I had failed to raise potentially significant arguments during adjudication, simply because I did not know enough to appreciate their relevance at the time."

This has led my resident to ask how many ordinary Singaporeans who do not qualify for pro bono legal services, how many of them would realistically be able to defend themselves? Is our system stacked against the ordinary consumer without legal aid?

I feel for this and I also know what the Government is doing. So, I just want to hear the Ministry's comments on this and how we can maybe improve the situation.

Mr Speaker. I understand what Ms Denise Phua is saying, because there are indeed a range of different types of cases.

Some instances, the individual involved may be partially responsible for what happened because they did not take enough care, they did not do enough to protect themselves. They, in fact, sometimes proactively participate in some of these, thinking that they were able to make an investment, and later on it turned out to be the wrong decision.

But in some cases, and as Ms Phua shared, it is somebody who is genuinely being scammed and the person did not authorise the transaction. And that is why I think the system, to be fair to all stakeholders, need to have a rigorous process to assess the facts of each case before deciding what is the response.

So, I hope Ms Phua will agree with me that the rigour in the system is actually a good thing, because that is what we can then do to help the genuine cases even more, while not opening up in a way a floodgate and encouraging the wrong types of behaviours and moral hazard in the system – because then that will mean we have less resources available to help the genuine cases.

That is the first point I want to make about the rigour of the process. But the second one is I want to assure Ms Phua is this, and I mentioned it in my main reply, that we do not design a system whereby the individual would need to receive legal assistance on a pro bono basis to be able to help represent himself or herself, because this is where the Financial Industry Disputes Resolution Centre comes in. Through this centre, it will offer an independent and affordable avenue for dispute resolution without the individual involved having to get legal representation.

So, this is one way in which we can provide some assurance to individuals who are caught and have a genuine case for dispute resolution.