HSBC Sued By Australian Regulator For Failures Against Scams

(RTTNews) - Australia's markets regulator sued the Australian unit of British lending major HSBC Holdings Plc for allegedly failing to adequately protect customers from scams.

As per the documents filed by the Australian Securities and Investments Commission or ASIC, HSBC Bank of Australia Ltd. or HSBC Australia failed to properly protect customers scammed out of millions of dollars.

In a statement, the regulator alleged that HSBC Australia did not have adequate controls in place to prevent and detect unauthorised payments. The unit also failed to comply with its obligations to investigate customer reports of unauthorised transactions within the specified timeframes required, and to promptly reinstate their banking services in a timely manner.

There was a significant escalation in reports of unauthorised transactions by HSBC Australia customers from mid-2023. Such movement often occurred after scammers had obtained access to their accounts by impersonating HSBC Australia staff.

HSBC received around 950 reports of unauthorised transactions between January 2020 and August 2024, resulting in customer losses of about $23 million. Of this, almost $16 million occurred in the six months from October 2023 to March 2024.

ASIC Deputy Chair Sarah Court said, "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 $90,000 or more."

Further, HSBC Australia allegedly compounded the problem by failing to comply with its obligations under the ePayments Code and took on average 145 days to investigate customers' reports that they had been scammed.

HSBC Australia also failed to promptly restore customers' full access to their bank accounts, on average taking 95 days to do so. Meanwhile, one customer did not have full access restored for 542 days.

In the filing, ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs.

According to the regulator, Australians in 2023 lost $2.74 billion to scams.?

The lawsuit comes as the Australian Parliament on November 7 introduced a legislation to establish a new Scams Prevention Framework, imposing obligations on entities in designated sectors to prevent, detect, disrupt, report and respond to scams, and to establish effective governance systems.