Australian Securities and Investments Commission (ASIC) has sued HSBC over allegedly failing to adequately protect its customers against fraud.
ASIC claims that HSBC Australia did not have sufficient controls to prevent or detect unauthorised payments and failed to meet its obligations to investigate customer reports of such transactions within the required timeframes.
Additionally, the bank allegedly failed to promptly restore affected customers’ banking services, with some individuals taking up to 542 days to regain full access, according to ASIC.
The regulator also asserts that, from mid-2023 onwards, there was a notable increase in reports of unauthorised transactions by the bank’s Australian customers, many of which followed instances where scammers gained access to accounts by impersonating HSBC Australia staff.
Sarah Court, Deputy Chair at ASIC, stated: “We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers.
“We allege that from at least January 2023, HSBC Australia was aware of the risks of unauthorised transactions occurring and that there were gaps in their fraud controls. This resulted in some customers getting scammed out of AU$90,000 or more.
Court noted that HSBC Australia failed to meet its obligations under the ePayments Code, with investigations into scam reports averaging 145 days. As a result, she stated that HSBC “let its customers down.”
ASIC is currently seeking court orders for violations, financial penalties, public notices, and costs.
“We know scammers are constantly looking for new ways to exploit people. Customers can lose their life savings in an instant. Scammers do not discriminate,” Court concluded.
“All banks need to pull their weight in the fight against scams. We will not hesitate to take court action where we consider banks fail to comply with their obligations to protect their customers.”
HSBC has been under increasing scrutiny recently in the UK, for its handling of customer complaints and financial services.
In May, the bank was fined £6.2m by the Financial Conduct Authority (FCA) for failing to properly assist customers facing financial difficulties. The FCA’s penalty was a result of HSBC’s ‘inadequate’ handling of cases where customers struggled to make payments.
