Should banks be made fully responsible for fraud cases? Deputy minister says losses covered unless due to users’ negligence

KUALA LUMPUR, July 9 — Bank must bear losses in cases of fraud unless the security was compromised by the account holder’s own negligence, Deputy Finance Minister Lim Hui Ying has told the Parliament.

Lim also listed down several measures undertaken by banks to prevent scams and fraud cases, such as a kill switch for customers to freeze their accounts.



“Generally, every case of fraud will be examined, and for cases caused by the bank’s system weaknesses or its risk management practices, the bank will be responsible for bearing the losses,” she said in a written reply.

“However, if clear evidence shows that security details were compromised due to the account holder’s negligence, the bank needs to consider offering appropriate compensation to the victim based on the details of the case. If the account holder disagrees with the bank’s decision or compensation offer, they have the right to dispute this decision with the Financial Services Ombudsman.”

She was responding to Stampin MP Chong Chieng Jen, who asked for a legislation update so banks can be made accountable for the rising number of scam cases.

However, Chong, who is also the Sarawak DAP chief, later highlighted the inadequacy of current regulations and practices by banks in compensating scam victims, saying that they “are not practised by the banks”.

“There is no way a victim of a bank scam who is a layman can ever prove ‘the system weakness of a bank,’ and no bank will ever admit that there is some weakness in its system resulting in the scam,” Chong said in a statement afterwards.

“When the negligence is on the victims, the banks will never pay any compensation,” he added.

Chong also cited ten unresolved complaints he had forwarded to the Ministry of Finance in January 2023, where money was withdrawn from accounts without authorisation, yet the banks refused to compensate.

“I urge the deputy minister to apply the regulations which she has just mentioned in Parliament and test it on the ten cases that I now re-submit to her again for resolution,” Chong said.

Last month, a whopping RM24.2 million in total was taken out from several fixed deposit accounts in MBSB Bank in Kota Kinabalu, in what was suspected to be fraud by a syndicate.

MBSB Bank has refunded all the monies affected after Bank Negara Malaysia (BNM) called for it.

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