The Australian Securities and Investments Commission (Asic) has initiated legal action against HSBC Australia, accusing the bank of systemic failures in safeguarding customers from scams and recovering their losses promptly.
According to Asic, HSBC did not implement adequate controls to prevent unauthorised payments, failed to investigate customer reports within the required timeframes, and delayed restoring full access to banking services for affected customers.
Rising Scam Reports and Customer Losses
The regulator highlighted a surge in unauthorised transaction reports starting in mid-2023, with scammers often impersonating HSBC Australia staff to gain account access. Key statistics from Asic’s allegations include:
- 950 reports of unauthorised transactions from January 2020 to August 2024.
- Customer losses amounting to approximately $23 million—with $16 million reported between October 2023 and March 2024 alone.
Alleged Shortcomings
HSBC is accused of widespread and systemic failings, including:
- Inadequate Controls: HSBC did not have sufficient measures in place to prevent or detect unauthorised payments.
- Delayed Investigations: The average time taken to investigate scam complaints was 145 days, well beyond the timelines mandated by the ePayments Code.
- Slow Restoration of Account Access: Customers waited an average of 95 days for account reinstatement, with one individual waiting 542 days.
Asic’s Viewpoint
Sarah Court, Asic’s deputy chair, criticised the bank’s response:
“We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers. They let their customers down when they needed their help the most.”
Court emphasised the compounded impact of HSBC’s delays in both investigations and restoring access to services, which left customers vulnerable and without recourse.
What Asic Seeks
In response to these allegations, Asic is pursuing:
- Declarations of contraventions.
- Pecuniary penalties.
- Adverse publicity orders.
- Cost reimbursements.
This case underscores the growing responsibility of financial institutions to fortify their defences against scams, especially as fraudulent activities continue to rise globally.