Franklin’s losses exceeded the scheme’s compensation limit of $500,000. To allow us to consider the complaint, Franklin agreed to limit his claim to that amount.

Our investigation

The Code of Banking Practice offers protection against scams to customers making a payment to a domestic bank account on or after 30 November 2025. Franklin’s payments to the New Zealand bank account were made before that date, while his later payments were international transfers. He was therefore not eligible for compensation under the code.

The bank’s records showed it had concerns about two payments to the New Zealand account, which had previously been linked to scam activity. The bank froze Franklin’s account, contacted him several times, warned him about its concerns, questioned him about the payments, and contacted the receiving bank. Franklin repeatedly told the bank he was lending money to a family friend. The information provided by the receiving bank was consistent with this explanation. We found the bank made appropriate inquiries and gave Franklin appropriate warnings before removing the hold on his account.

The bank regarded the international transfers, being large amounts going overseas to company accounts, as high-risk transactions and asked Franklin fraud-related questions before processing them. On each occasion, Franklin said he knew the recipients, had checked their legitimacy, was confident the payments were not part of a scam, and understood the risk that the bank might not be able to recover the money. The bank could assess the transactions using only the information available to it at the time, and Franklin consistently described the payments as being for family or family business purposes. As such, the bank had no information to suggest the possibility that Franklin might be the victim of a scam and therefore was under no obligation to take further action.

Outcome

We did not uphold Franklin’s complaint.