HSBC Australia Faces ASIC Lawsuit over Alleged $23 Million Scam Losses

Australia’s
financial watchdog has launched legal proceedings against HSBC Bank Australia
Limited (HSBC Australia), alleging the bank failed to adequately protect
customers from scams resulting in millions of dollars in losses.

HSBC Australia Faces Legal
Action over Alleged Scam Protection Failures

The
Australian Securities and Investments Commission (ASIC) filed
documents in the Federal Court today
(Monday), claiming HSBC Australia
lacked sufficient controls to prevent and detect unauthorized payments. The
regulator also accuses the bank of failing to comply with its obligations to
investigate customer reports of unauthorized transactions within required timeframes
and to promptly reinstate banking services.

According
to ASIC, HSBC Australia received approximately 950 reports of unauthorized
transactions between January 2020 and August 2024, with customer losses
totaling about $23 million. Nearly $16 million of these losses occurred in just
six months, from October 2023 to March 2024.

ASIC Deputy Chairwoman, Sarah Court

“We
allege HSBC Australia’s failings were widespread and systemic, and the bank
failed to protect its customers,” ASIC Deputy Chair Sarah Court stated. “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.”

The
regulator claims HSBC Australia took an average of 145 days to investigate
customers’ scam reports and 95 days to restore full access to bank accounts. In
one extreme case, a customer reportedly waited 542 days for full account access
to be reinstated.

ASIC is
seeking court declarations of contraventions, financial penalties, adverse
publicity orders, and costs against HSBC Australia. The watchdog alleges the
bank failed to ensure its financial services and credit activities were
provided efficiently, honestly, and fairly, as required by Australian law.

This legal
action comes amid increasing concern over the rise of scams in Australia. The
Australian Competition and Consumer Commission reported that Australians lost
$2.74 billion to scams in 2023. In response to this growing threat, legislation
was introduced to Parliament on November 7, 2024, to establish a new Scams
Prevention Framework.

HSBC’s History of
Regulatory Scrutiny

This is not
the first time HSBC has faced intense regulatory scrutiny over alleged
misconduct. In 2017, the bank was fined $175 million by the U.S. Federal
Reserve Board for a longstanding pattern of “unsafe and unsound practices” in
the foreign exchange (FX) markets.

More
recently, in 2023, the U.S. Commodity Futures Trading Commission (CFTC)
penalized HSBC Bank USA $45 million. The fine stemmed from allegations of
“manipulative and deceptive trading” by HSBC traders and a failure to
maintain proper business call records. The CFTC confirmed a settlement with
HSBC’s U.S. subsidiary as part of the resolution.

In 2024,
HSBC faced significant penalties in the United Kingdom. The Prudential
Regulation Authority (PRA) fined the bank £57.4 million ($73 million) for
“serious failings” in safeguarding certain customer deposits
as
mandated by British banking rules.

Additionally,
the Financial Conduct Authority (FCA) imposed a £6.28 million fine on HSBC UK
Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc for
mishandling customers experiencing financial difficulties.

Australia’s
financial watchdog has launched legal proceedings against HSBC Bank Australia
Limited (HSBC Australia), alleging the bank failed to adequately protect
customers from scams resulting in millions of dollars in losses.

HSBC Australia Faces Legal
Action over Alleged Scam Protection Failures

The
Australian Securities and Investments Commission (ASIC) filed
documents in the Federal Court today
(Monday), claiming HSBC Australia
lacked sufficient controls to prevent and detect unauthorized payments. The
regulator also accuses the bank of failing to comply with its obligations to
investigate customer reports of unauthorized transactions within required timeframes
and to promptly reinstate banking services.

According
to ASIC, HSBC Australia received approximately 950 reports of unauthorized
transactions between January 2020 and August 2024, with customer losses
totaling about $23 million. Nearly $16 million of these losses occurred in just
six months, from October 2023 to March 2024.

ASIC Deputy Chairwoman, Sarah Court

“We
allege HSBC Australia’s failings were widespread and systemic, and the bank
failed to protect its customers,” ASIC Deputy Chair Sarah Court stated. “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.”

The
regulator claims HSBC Australia took an average of 145 days to investigate
customers’ scam reports and 95 days to restore full access to bank accounts. In
one extreme case, a customer reportedly waited 542 days for full account access
to be reinstated.

ASIC is
seeking court declarations of contraventions, financial penalties, adverse
publicity orders, and costs against HSBC Australia. The watchdog alleges the
bank failed to ensure its financial services and credit activities were
provided efficiently, honestly, and fairly, as required by Australian law.

This legal
action comes amid increasing concern over the rise of scams in Australia. The
Australian Competition and Consumer Commission reported that Australians lost
$2.74 billion to scams in 2023. In response to this growing threat, legislation
was introduced to Parliament on November 7, 2024, to establish a new Scams
Prevention Framework.

HSBC’s History of
Regulatory Scrutiny

This is not
the first time HSBC has faced intense regulatory scrutiny over alleged
misconduct. In 2017, the bank was fined $175 million by the U.S. Federal
Reserve Board for a longstanding pattern of “unsafe and unsound practices” in
the foreign exchange (FX) markets.

More
recently, in 2023, the U.S. Commodity Futures Trading Commission (CFTC)
penalized HSBC Bank USA $45 million. The fine stemmed from allegations of
“manipulative and deceptive trading” by HSBC traders and a failure to
maintain proper business call records. The CFTC confirmed a settlement with
HSBC’s U.S. subsidiary as part of the resolution.

In 2024,
HSBC faced significant penalties in the United Kingdom. The Prudential
Regulation Authority (PRA) fined the bank £57.4 million ($73 million) for
“serious failings” in safeguarding certain customer deposits
as
mandated by British banking rules.

Additionally,
the Financial Conduct Authority (FCA) imposed a £6.28 million fine on HSBC UK
Bank plc, HSBC Bank plc, and Marks and Spencer Financial Services plc for
mishandling customers experiencing financial difficulties.

This post is originally published on FINANCEMAGNATES.

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