Financial Safety in Focus

In the wake of widespread scam activity – some of which we have heard about directly from our clients – and the emergence of a multi-speed economy, Australians are facing increased financial vulnerability.

This quarter, we underline the importance of protecting yourself from financial scams as critical security gaps in myGov are revealed. Our CIO, Daniel Rolley, also explains how the growing divide between older wealthy Australians and younger Australians struggling with rising costs is driving investors to more defensive financial strategies.

myGov fails to ‘adequately protect’ Australians from scammers

A new report by the Commonwealth Ombudsman has revealed myGov’s current security controls do not adequately protect Australians from scammers using unauthorised linking to commit fraud.

The report also found that myGov provides no additional security checks to protect high-risk transactions, and there’s no formal process to manage shared risks across the myGov ecosystem – which includes Centrelink, Medicare, and the Australian Tax Office (ATO).

According to the report, scammers are using unauthorised linking to create fake myGov accounts and link them to legitimate Services Australia accounts – including Centrelink, Medicare, and ATO accounts – without the knowledge or consent of account holders.

This allows scammers to gain access to personal information and make fraudulent claims or change details like bank account information. It essentially bypasses normal security measures and exploits a ‘side entrance’ in the system.

The revelations come off the back of last year’s Medibank and Optus data breaches that contributed to a total of $2.74 billion lost to scams in 2023.

How are Australians affected?

Commonwealth Ombudsman, Iain Anderson, has spoken about the impact myGov scams have had on victims, and underlined the need for robust protections:

“People have told us about the stress and anxiety they experienced when their personal information was stolen, and fraud committed in their name. Given the volume and sensitivity of information held in member service accounts linked to myGov, robust protections to stop fraudsters gaining unauthorised access to myGov accounts are essential.”

And it seems older Australians are getting hit the hardest by scammers. Scamwatch data suggests people over the age of 65 suffered the greatest harm from scammers in 2023:

Reported scam losses for people over the age of 65 increased by 13.3% to $120 million.
People over the age of 65 were the only age group to experience an increase in reported losses.
People over the age of 65 were disproportionately impacted by investment scams.

What happens next?

The Ombudsman’s report made a series of recommendations and suggestions to Services Australia, aimed at improving security controls for unauthorised linking and high-risk transactions, how shared risk is managed across the myGov ecosystem, and how Services Australia responds to customer reports of fraud.

Services Australia has accepted all of the Ombudsman’s recommendations and suggestions, and is currently working to implement them. In the meantime, take note of the following tips to protect your data and money.

5 tips to protect yourself from financial scammers

From too-good-to-be-true investment offers to phoney invoices and impersonating bank staff, scammers will stop at nothing to steal your money or personal information. In fact, the problem is so rife that more than 600,000 Australians reported a scam in 2023.

But if you know their playbook, it’s easier to spot a scam coming – and take swift action to protect yourself. Here are five tips you can use to keep yourself safe from scammers…

Look before you leap
Investment and crypto scammers may contact you with a low-risk, high-return offer that seems too good to be true – because it is. They might invite you to invest via fake online platforms that are designed to steal your money or personal information. If you’re contacted with such an ‘opportunity’, always check that the company is licensed through ASIC and verify their contact details independently.
Resist pressure to act fast
After getting involved with one of these fake investment or crypto platforms, you may be contacted by scammers claiming they can recover your lost money – for a fee. These nefarious characters are known as money recovery scammers, and will likely put pressure on you to act fast. Immediately cease contact with them and independently verify their contact details.
Verify emailed invoices
Be careful with any emails you receive that contain an invoice or ask you to make a payment. Even if the email appears to be from a company or person you know, scammers may have hacked into their email account to send you a phoney invoice. If you receive an unexpected invoice via email, always speak directly to a known contact at the company to confirm it’s legitimate.
Never share log-in details
Some scammers will pose as a familiar organisation, like a technology provider or telco, and offer to ‘fix’ a fake security issue, system error, or internet connection problem. To do so, they’ll ask you to give them remote access to your device or share your log-in details. Don’t do it. If you are experiencing tech issues, call your provider on their official customer service line.
Double check bank requests
Be very careful when dealing with anyone who claims to work for your bank. Scammers may pose as fraud-prevention officials and ask you to reset your passwords, share secure codes, or download software to protect yourself from fraud. If this happens, hang up and call your bank on their official customer service line to confirm that the request is legitimate.

Defensive investment strategies key in Australia’s multi-speed economy

Double-digit rental growth, rapidly rising interest rates, and higher inflation are squeezing younger Australians’ budgets, while older savers are capitalising on attractive fixed-income funds.

This is creating a multi-speed economy that’s increasing investors’ preference for defensive assets and driving the growth of technology-first wealth management platforms.

Older Australians, particularly those without a mortgage, are reaping the benefits of rising savings and increased discretionary spending. While younger Australians, especially those renting or managing mortgages, are facing declines in savings and discretionary spending.

This divergence has broad implications for investment strategies. As inflation and interest rates continue to climb, there’s a growing preference for defensive assets among investors.

“In particular, fixed income funds are presenting a highly competitive yield when compared to the share market, a trend we haven’t seen in over a decade,” explains Daniel Rolley, Chief Investment Officer at Financial Decisions. “This shift is pushing wealth management portfolios to lean more defensively, helping to shield clients from economic volatility.”

For investors keen to take advantage of the rising wealth held by older Australians, leaning into wealth management platforms like Hub24 and Netwealth can be worth considering. These companies have carved out a substantial niche by offering superior technology and services compared to traditional, bank-aligned competitors.

“Hub24, for instance, has expanded its market share from virtually nothing to around 5% in recent years,” says Rolley. “As this trend persists, these platforms are well-positioned for continued growth, and we would expect to see continued market share gains and corresponding earnings growth from the likes of Hub24 and Netwealth.”

Exchange – September 2024

Financial Safety in Focus

myGov fails to ‘adequately protect’ Australians from scammers

How are Australians affected?

What happens next?

5 tips to protect yourself from financial scammers

Defensive investment strategies key in Australia’s multi-speed economy

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