HSBC's Australian unit has admitted to significant failures in protecting customers from scams, agreeing to pay a A$35 million penalty pending court approval. The Australian Securities and Investments Commission highlighted inadequate controls and slow investigation times.
This case highlights the critical responsibility of banks to protect customers from financial scams and sends a global message that such failures will result in significant penalties.
HSBC's Australian unit has admitted to significant failures in protecting customers from scams, agreeing to pay a A$35 million penalty pending court approval. The Australian Securities and Investments Commission (ASIC) stated that between May 2023 and May 2024, the bank failed to maintain adequate controls over its internal transfer systems, increasing the risk of unauthorized transactions. The regulator also noted that HSBC was aware of impersonation scam threats as early as May 2021 and breached its financial services licence obligations by not adequately preventing scams and taking an average of 144 days to investigate customer reports. Furthermore, the bank had insufficient systems to help customers regain access to accounts locked after scam incidents. HSBC has reached an agreement with ASIC to resolve the proceedings, acknowledging its customer redress program and enhancements to fraud prevention measures. The proposed settlement requires approval from the Federal Court.