HSBC Bank Australia (LON:HSBA) faces a potential fine of A$35 million (US$24.6 million) after acknowledging significant failures in safeguarding customers from scams, as reported by Australia’s securities regulator on Thursday.
The Australian Securities and Investments Commission (ASIC) and HSBC will jointly submit a proposed penalty to the Federal Court for approval. This marks one of the first instances globally where a bank is held accountable for deficiencies in its scam prevention systems.
According to ASIC, HSBC admitted that between May 2023 and May 2024, the bank did not adequately oversee its internal transaction systems, thereby exposing customers to an increased risk of unauthorized transactions.
The bank also acknowledged being aware since 2021 of the escalating threat posed by scammers impersonating HSBC representatives.
ASIC data indicates that from January 2020 to August 2024, the bank received over 1,000 reports of unauthorized transactions totaling A$34.6 million. The volume of such reports surged significantly, by approximately 380%, during 2023-2024, primarily driven by impersonation scams.
The regulator also pointed out that HSBC breached its licensing obligations by experiencing substantial delays in handling scam-related complaints – with an average resolution time of 144 days per case – and failing to provide adequate resolution tools for customers locked out of their accounts.
HSBC has initiated a remediation program and has so far reimbursed affected customers approximately A$21.5 million in compensation, in addition to returning another A$6.5 million. The proposed settlement remains subject to Federal Court approval.
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