The Australian Securities and Investments Commission (ASIC) has initiated legal action against HSBC Australia for its failure to safeguard customers from scams.
The regulator claims that the bank did not have adequate controls to prevent or detect unauthorised transactions and did not comply with its obligations to investigate and respond to customer reports of such activities within the required timeframes.
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From mid-2023, HSBC Australia reportedly saw a sharp increase in unauthorised transaction reports, often following account breaches by individuals impersonating bank staff.
In documents filed in the Federal Court, ASIC said that between January 2020 and August 2024, the bank received about 950 reports of unauthorised transactions, with customer losses totalling approximately A$23m ($14.6m).
Notably, nearly A$16m ($10.1m) of these losses occurred between October 2023 and March 2024.
ASIC’s allegations against HSBC Australia include the lack of sufficient systems and processes from January 2020 to investigate reports of unauthorised transactions promptly and to reinstate banking services swiftly for affected customers.
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By GlobalDataFurthermore, from 1 January 2023 to 1 June 2024, the bank is accused of not having adequate controls in place to prevent and detect unauthorised payments.
ASIC deputy chair Sarah Court said: “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.
“We are also concerned that HSBC Australia failed to promptly restore customers’ full access to their bank accounts, on average taking 95 days to do so. One customer did not have full access restored for 542 days.”
Scamwatch issued an alert in February this year, on the HSBC Australia impersonation scam.
This legal action comes against a backdrop of increasing scam activities in Australia, with the ACCC reporting a staggering loss of A$2.74bn ($1.74bn) to scams in 2023 alone.
To combat such threats, new legislation was proposed in November this year, aiming to establish a Scams Prevention Framework to mandate entities in designated sectors to implement measures against scams.
