The Financial Ombud warns South Africa’s current bank-customer liability model is outdated and urges innovation, collaboration, and legal reform.
Banks must take greater responsibility, not just in securing their systems, but also protecting their customers, says the National Financial Ombud Scheme.
“While consumer education is ongoing, more can be done to empower users and reduce the risk of manipulation,” it said.
Shared responsibility in fraud prevention
“International best practice recognises that effective fraud prevention relies on a shared responsibility model between financial institutions and consumers.
“Banks are expected to implement strong systems, detect suspicious activity and educate customers, but users also have a responsibility to remain vigilant and follow safe practices.
“It is essential that consumers take reasonable precautions, such as not sharing personal information, verifying communications and using official channels.
“In South Africa, the legal position still flows primarily from the bank-customer contract, which assumes that if customers entered their OTPs or authorised a transaction, the liability rests with them,” the ombud said.
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“That model, while rooted in contract law, is increasingly strained in the face of today’s evolving fraud landscape.
“It is important to acknowledge that Singapore is a well-resourced and tightly regulated environment, while South Africa faces different realities.
Need for collaboration and legal reform
“Implementing a similar framework here would require collaboration across sectors, including banks, telecoms, regulators and consumer bodies. It would also require legal reform to clarify roles and responsibilities.”
“The fraud landscape has shifted from simple phishing to highly convincing impersonations, voice cloning, deepfakes and automated social engineering, all powered by AI,” the ombud said.
“While much is being done, banks must continue to invest, collaborate and innovate to stay ahead in what has become a rapidly evolving digital arms race.”
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