Bank apologises for widespread scam failures

An Australian bank has apologised to customers after it failed to protect them from scams, some of which saw some account holders lose their life savings.

HSBC Bank Australia has admitted to serious failures, after it was taken to court by the Australian Securities and Investment Commission.

Do you know more? Email reporter Emily Bennett at ebennett@nine.com.au

The bank and the corporate watchdog will today ask the Federal Court of Australia to find HSBC contravened the law and impose a penalty of $35 million.

The proposed resolution is subject to the approval of the court.

HSBC received more than 1000 reports of unauthorised transactions, with a total transaction value of $34.6 million, between January 2020 and August 2024.

ASIC Chair Sarah Court described the case as one of the first of its kind globally and one that sent a “clear message that protecting customers from scams is a core responsibility of banks”.

Read more

Australia Post issues urgent warning over viral marketplace scams

“HSBC’s alleged failures left customers more vulnerable to scams, tens of millions of dollars out of pocket and waiting months to find out what had happened to their money,” Court said.

“Individual customers lost tens of thousands of dollars which, for some, were their life savings, causing them real stress and uncertainty.”

An HSBC spokesperson apologised to impacted customers in a statement.

“We apologise to our customers who were impacted by these events,” the spokesperson said.

“We are pleased to have reached an agreement to resolve the proceedings with ASIC, which recognises our customer redress program and the significant enhancements made to our fraud and scam prevention, detection and response.

 “The settlement agreement is subject to approval by the Federal Court of Australia.”

ASIC said in a statement HSBC Australia has admitted between May 2023 and May 2024, it failed to have adequate controls on its internal transfer system, exposing customers to a greater risk of unauthorised payments.

The bank was aware from May 2021 of the growing risk of impersonation scams, where scammers masqueraded as representatives of HSBC.

Reports of unauthorised transactions to HSBC surged approximately 380 per cent in 2023 and 2024, largely driven by impersonation scams.

Customers were put at greater risk of financial and non-financial harm, and some suffered that harm, due to the bank’s failure to adequately protect its customers from scams.

ASIC said HSBC Australia breached its financial services licence obligations due to major delays in investigating cases, which took an average of 144 days to finalise.

The bank also had inadequate systems to inform customers how to regain access to their accounts that were locked after they had reported a scam.

Following ASIC’s investigation, the bank set up a large-scale remediation program.

The bank has paid about $21.5 million in compensation to date, with further payments to come.

HSBC has also recovered $6.5 million and returned the funds to customers.

Some of the customers were scammed included a 51-year-old dental technician from NSW who lost $47,000 and a Victorian couple in their 50s lost $48,000 that was transferred out of their home loan.

Some customers reported having to borrow money from elsewhere, taking on extra shifts at work or fearing they would struggle to meet their home loan repayments.

Others reported distress, guilt, panic, and the stress of being unable to access their money or accounts.