ANZ has blocked the Banking Ombudsman from investigating a $1 million fraud case - despite referring the victim to the watchdog and denying liability for his loss. Photo / Alex Burton
ANZ has blocked the Banking Ombudsman from investigating a $1 million fraud case - despite referring the victim to the watchdog and denying liability for his loss. Photo / Alex Burton
ANZ blocked the Banking Ombudsman from investigating a $1 million fraud involving an Auckland businessman.
The victim was scammed by offshore fraudsters but ANZ denied liability, citing the ombudsman’s financial limit.
Consumer NZ’s Jon Duffy criticised ANZ’s actions, highlighting the power imbalance between banks and customers.
ANZ has blocked the Banking Ombudsman from investigating a $1 million fraud case - despite referring the victim to the watchdog and denying liability for his loss.
The country’s biggest bank is now accused of hypocrisy and trying to avoid independent scrutiny over its handling of the massive investment scam.
“It’s unfair that ANZ has deemed itself not liable for these losses but is unwilling to waive the threshold so the ombudsman can investigate,” Consumer NZ boss Jon Duffy said.
“The victim is absolutely powerless and we believe things have to change.”
ANZ is defending its decision, saying the man’s huge loss is twice the current Banking Ombudsman Scheme (BOS) financial limit and any review of the case should be conducted through the courts.
The Auckland businessman, Colin*, was duped by an elaborate scam involving offshore fraudsters after selling his business and looking to invest the proceeds for his retirement.
He was contacted by a man pretending to be a Citibank financial adviser and tricked into sending 20 online payments of $50,000 each from his ANZ account over the space of just eight days in November 2022.
He was even given login details to a fake client “portal” where he could see his supposed investment incurring interest.
When the portal was deleted in January 2023, Colin realised he’d been scammed and contacted ANZ and police.
It emerged his money had gone to a Westpac account allegedly controlled by a South Auckland JP who has now been charged with money laundering in connection with 11 separate victims and total losses of $1.8m.
Colin accused ANZ of failing to detect the fraud or identify any red flags in connection with his unusual pattern of money transfers.
ANZ investigated but denied liability because Colin had authorised the transfers, and referred him to the BOS.
The ombudsman was prepared to examine Colin’s case. But as his loss was over the scheme’s current $500,000 threshold, it wrote to ANZ last year asking if the bank would agree to waive the limit so the fraud could be independently reviewed.
But in May, an investigator informed Colin ANZ “are not willing to waive the financial limit to enable our office to formally consider your complaint”.
‘ANZ are using the escape clause’
Colin told the Herald it was cynical and hypocritical for ANZ to deny liability and refer him to the ombudsman, only to veto an independent review.
“ANZ are using the escape clause to stop the Banking Ombudsman from investigating our complaint.
“For me it’s just one step of many steps which frustrates my process of getting any sort of resolution or outcome for what is a huge fraud.
“I don’t think ANZ was fully responsible but they are at least partially responsible because there are some things they could have done but didn’t do to save my bacon.”
In a 2023 letter to the Banking Ombudsman, Colin detailed the scam’s devastating effects.
“The loss of my retirement saving has left my wife and I with mental anguish. How could this enormous amount of our life savings be stolen from us?
“I am appealing to you to require the bank to reimburse at least part of our funds, pursue the criminals who participated in these schemes, and prevents others from falling victim to these criminals.
“The banks are very much a part of this crime. Although they make billions of dollars in profits, they are failing to have their systems carry basic checks that could flag these crimes.”
ANZ says large scam losses ‘better considered by the courts’
In a statement this week, ANZ said it sympathised with Colin. It carried out a careful internal investigation which found the bank was not responsible for his loss.
While ANZ referred Colin to the BOS, it informed him that his loss was outside the scheme’s financial limit - which was $350,000 at the time of the scam, before being raised to $500,000 last year.
ANZ said the Ombudsman’s dispute resolution scheme was governed by specific legislation, and its limits set at levels to ensure “fairness, appropriate decision making and effective avenues of appeal”.
A recent MBIE review had found dispute resolution schemes may lack the “resources and expertise” to consider higher value disputes, which were arguably “more complex and technical”, ANZ said.
“This could impact the efficiency and potentially effectiveness of the scheme. Importantly, it may mean the outcome is not fair to both parties.”
ANZ refused liability for the man's $1m loss then referred him to the Banking Ombudsman.
Given the amount involved in Colin’s case, ANZ felt the BOS “was not the appropriate avenue to further examine the case”.
“We agree that amounts significantly above the limit are better considered by the courts.”
ANZ added that previous Banking Ombudsman decisions on scam cases were now “well established” and “provided appropriate transparency and confidence for customers”.
Banks had a strict duty to follow customers' instructions.
“In cases where the customer had made payments digitally without assistance from the bank, where there are no clear indications of the possibility that the customer may be the victim of a scam, the Ombudsman has ruled that a bank is not responsible for any loss.”
‘I’ve already lost so much'
Colin said ANZ’s suggestion that fraud victims who’d lost their life savings should file civil proceeding was fanciful given the huge litigation costs and lack of certainty.
“It’s just throwing the baby out with the bathwater. I’ve already lost so much.”
Duffy said ANZ’s veto was unfair and reflected the inherent power imbalance between banks and customers.
“A lack of investment in technology and innovation in the banking sector means New Zealanders are paying the price. There should have been systems in place to stop this victim from being scammed, obviously there wasn’t.”
Consumer NZ chief Jon Duffy says the victim is powerless and the system needs to change.
The Herald asked Banking Ombudsman Nicola Sladden whether her office lacked the necessary resources and expertise to investigate “complex and technical” higher losses, and whether such cases were better left to courts.
She said the BOS could only investigate claims above $500,000 if both the bank and customer agreed.
While some cases might be of legal complexity beyond the scheme’s expertise, it could minimise that risk by refusing cases if a court was considered a more appropriate forum, Sladden said.
A 2024 review of the scheme found it had a “rigorous and credible” approach to fair decision making and natural justice.
*Name changed to protect victim’s identity
Lane Nichols is Deputy Head of News and a senior journalist for the New Zealand Herald with more than 20 years' experience in the industry.
