Probity

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Probity
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BY NEIL HONEYMAN
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Tuesday. September 19, 2017
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PROBITY – the quality of having strong moral principles; honesty and decency: financial probity – The New Oxford American Dictionary

A major reason why financial institutions, particularly banks, exist is because we trust them. My concern is that our level of trust has eroded over the past decade. This has caused a relationship, hitherto based on mutual respect, to have changed into one which is all too often adversarial.

I first opened a bank account in 1961. For the next 46 years I experienced complete probity. There was never any dispute with my bank as to what happened. For the past ten years, however, I have encountered several examples where probity cannot be taken for granted.

The lack of probity does not necessarily reflect a lack of human probity since the problem can be largely attributed to technological ‘glitches’. I am uneasy about using the word ‘glitch’ since it can be used to imply, wrongly, that the problem arose due to circumstances beyond human control. This is rarely the case.

There are those, particularly representatives of first world banks, who say that technological advances have made checks redundant. I disagree. Never have I experienced any problems with checks whereas various forms of electronic banking have caused grief. Checks will remain a key component of my payment systems for many years to come.

Card-skimming at automated teller machines (ATMs) has become prevalent for at least the past five years. In 2012, Bangko Sentral ng Pilipinas (BSP) expressed concern about the number of fraudulent transactions resulting from cards that had been ‘skimmed’. This means that the data on the ATM card had been stolen. This, coupled with the customer’s personal identity number (PIN), meant that the card could be used to steal funds from the customer’s account.

In 2012, BSP instructed banks that by January 1, 2013, the cards issued to customers should include a European Mastercard Visa (EMV) chip which makes card skimming impossible.

Instructed? As far as I can see BSP instructions, at least in this context, are not taken seriously by banks who decide for themselves when they will migrate to cards which cannot be skimmed. BSP has issued “instructions” to banks on several occasions, the last being this year which tells banks to issue the EMV cards by June 30, 2018. We shall see whether the remaining banks which still do not have EMV cards will comply.

My card was skimmed in August 2014, I salute my bank, Security Bank, for being proactive. A customer service representative phoned me to ask if I had recently been in Laguna. “No ma’am,” I replied.

Unfortunately, my card had skimmed. Fortunately, the bank refunded my stolen money within three days. I am left with an uneasy feeling about the theft of my PIN. This is because I had not used my account for four months and therefore the PIN had been stolen in April 2014. Since thieves are not noted for their deferred gratification, I can only surmise that the stolen PIN had been sold to the robbers. Sadly, bank staff may have been involved in this nefarious activity.

In June, Banco de Oro Unibank Inc (BDO) President Nestor V. Tan said instances of ATMs being compromised is “nothing out of the ordinary.” He is right.

But this is unacceptable.

Banks expect us to do our part to keep our cards and PINs safe. We comply. But banks have become careless about their obligations to ensure probity.

We are entitled to expect a more secure electronic banking environment than we have at present.

And we expect BSP to ensure that banks comply with its instructions.

Does BSP need additional legislation to enforce banks’ probity?/PN
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