The Australian Securities and Investments Commission has launched a lawsuit against HSBC Australia, alleging that the bank failed to adequately protect its customers from scams, resulting in millions of dollars in losses.
ASIC’s lawsuit claims that HSBC Australia did not have sufficient controls to prevent and detect unauthorised payments. Additionally, the bank is accused of not meeting its duties to investigate unauthorised transactions, which came to their attention too late, and suspending some customers’ accounts altogether.
According to ASIC, there was a significant increase in reports of unauthorised transactions from HSBC Australia customers starting in mid-2023. Many of these incidents occurred after scammers gained access to customer accounts by impersonating HSBC staff members via text message. Between January 2020 and August 2024, the bank received approximately 950 reports of unauthorised transactions, leading to customer losses totalling around $23 million. Nearly $16 million of these losses occurred between October 2023 and March 2024.
HSBC Australia faces significant legal and reputational challenges as it addresses ASIC’s allegations and works to rebuild customer trust.
ASIC Deputy Chair Sarah Court stated, “We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers. 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.”
This lawsuit highlights the critical importance of robust fraud detection and prevention measures in the banking sector as well as collaboration.
