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HSBC Bank Australia has been accused by the corporate regulator of failing to adequately protect customers who were scammed out of $23 million since early 2020 through unauthorised transactions.
A Federal Court filing by the Australian Securities and Investments Commission (ASIC) is alleging that HSBC Australia not only failed have the necessary controls in place to prevent and detect unauthorised payments but also failed to comply with its obligations to investigate customer reports of unauthorised transactions within the specified timeframes required.
ASIC alleges that there was a significant escalation in reports of unauthorised transactions by HSBC Australia customers from mid-2023 which often occurred after scammers had obtained access to their accounts by impersonating HSBC Australia staff.
Between January 2020 and August 2024, HSBC received about 950 reports of unauthorised transactions, resulting in customer losses of about $23 million with almost $16 million of this occurring in the six months from October 2023 to March 2024.
“We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers,” says ASIC’s deputy chair Sarah Court.
“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.
“We allege HSBC Australia compounded the problem by failing to comply with its obligations under the ePayments Code and let its customers down when they needed their help the most, on average taking 145 days to investigate customers’ reports that they had been scammed.”
Court says that ASIC is also concerned that HSBC Australia failed to “promptly restore” full access for customers to their bank accounts, with the bank taking on average 95 days to do so.
“One customer did not have full access restored for 542 days,” says Court.
ASIC is alleging that HSBC Australia “failed to do all things necessary to ensure that the financial services covered by its Australian financial services licence were provided efficiently, honestly and fairly” in contravention of the Corporations Act 2001.
The regulators also alleges that it failed to ensure that the credit activities authorised by its credit licence were engaged in “efficiently, honestly and fairly”.
“We know scammers are constantly looking for new ways to exploit people,” says Court.
“Customers can lose their life savings in an instant. Scammers do not discriminate.
“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.”
ASIC, which has revealed that Australians lost $2.74 billion to scams in 2023, is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders and costs.
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