HSBC’s Australia unit to pay A$35 million fine over scam protection failures, court rules

[SYDNEY] An Australian court has ordered HSBC’s local unit to pay A$35 million (S$31.7 million) after the bank admitted to failures in protecting customers from scams, the country’s corporate regulator said on Thursday.

HSBC failed to maintain adequate controls over its internal transfer systems between May 2023 and May 2024, exposing customers to a heightened risk of unauthorised transactions, said the Australian Securities and Investments Commission (Asic).

The bank was also aware as early as May 2021 of a growing threat from impersonation scams in which fraudsters posed as HSBC representatives, Asic said. Following a hearing earlier today, Australia’s Federal Court ordered the unit to pay the penalty and publish adverse publicity orders on its website, its app and in letters to impacted customers.

“Today’s outcome is one of the first of its kind globally and the A$35 million penalty ordered against HSBC is the strongest scam wake-up call yet to the banking industry,” Asic Chair Sarah Court said.

The regulator added HSBC breached its financial services licence obligations by failing to adequately prevent scams and by taking an average of 144 days to investigate customer reports.

The bank also had insufficient systems to help customers regain access to accounts that had been locked after scam incidents, Asic said.

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“(We) have reached an agreement to resolve the proceedings with Asic, which recognises our customer redress programme and the significant enhancements made to our fraud and scam prevention, detection and response,” an HSBC spokesperson said in an emailed response to Reuters. REUTERS