Committee calls for a scheme to automatically reimburse victims of digital banking scams

The Joint Committee on Finance said the rise in digital financial services has created “new opportunities for criminals to exploit

The Joint Committee on Finance on Thursday published a report on the regulatory oversight of neobanks, calling on the Government to publish the National Economic Crime Strategy without delay so gardaí can be given more resources to deal with a growing volume of suspicious transaction reports. File photo

A mandatory fraud reimbursement scheme for scam victims should be introduced, according to the Joint Committee on Finance.

The Joint Committee on Finance on Thursday published a report on the regulatory oversight of neobanks, calling on the Government to publish the National Economic Crime Strategy without delay so gardaí can be given more resources to deal with a growing volume of suspicious transaction reports.

A neobank is a digital-only bank that offers payment accounts and connects debit cards to smartphones through an app and digital wallet, similar to Revolut. Revolut previously told the committee it has a significant presence in the financial services market, with more than three million Irish customers and over 65 million worldwide.

The committee said the rise in digital financial services has created “new opportunities for criminals to exploit” and exposed “variations and gaps in the nature and quality of service customers receive, and in particular when there are issues”. 

It made 12 recommendations covering digital banking and changing consumer behaviour.

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These include considering the introduction of a mandatory fraud reimbursement scheme, similar to one introduced in Britain in 2024. Under the scheme, both the sending and receiving financial institutions would share liability in fraud cases, splitting reimbursement costs 50:50.

Another recommendation calls for “greater regulation” to protect consumers from the potential impact of speculative cryptocurrency investments. “This could include mandating digital banking apps offering crypto trading services to make clear the risks of speculative investments, providing prominent warnings at the point of purchase,” the report said.

The committee also recommended that the Government prioritise and provide explicit statutory authority for financial institutions to share sensitive fraud-related data so that an effective and efficient fraud database may be established.

Other recommendations include:

• The Central Bank and Coimisiún na Meán should formalise arrangements around reporting and enforcement mechanisms relating to unregulated financial products or firms.
• Protocols for cooperation on data exchange, investigations, reporting and enforcement should be formalised between the Central Bank, ComReg, Coimisiún na Meán and An Garda Síochána.
• Financial services institutions operating in the digital space should be required to notify the Central Bank and the Data Protection Commission in the event of a shift towards advertising or data monetisation.

Committee Cathaoirleach Mairéad Farrell said the committee had raised particular concerns with stakeholders, “including the prevalence of fraud within the Irish banking landscape, the blurring of the boundaries between neobanks and cryptocurrency exchanges, and poor customer service when dealing with neobanks". 

“Greater regulation should be introduced to protect consumers from the potential impacts of speculative investment in cryptocurrencies, including mandating digital banking apps offering crypto trading to make clear the risks of speculative investments and providing prominent warnings at the point of purchase."