The Australian Securities and Investments Commission (ASIC) has lodged documents in the Federal Court alleging that HSBC Bank Australia Limited (HSBC Australia) failed to adequately protect its customers from scams.

The regulatory body claims HSBC Australia did not have sufficient controls in place to prevent and detect unauthorised payments, leading to significant customer losses.

According to ASIC, there was a significant increase in reports of unauthorised transactions by HSBC Australia customers from mid-2023, often after scammers had impersonated HSBC Australia staff. Between January 2020 and August 2024, HSBC received approximately 950 reports of unauthorised transactions, resulting in customer losses of about $23 million. Almost $16 million of this occurred in the six months from October 2023 to March 2024.

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 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.”

In addition to these allegations, ASIC accuses HSBC Australia of failing to comply with its obligations to investigate customer reports of unauthorised transactions within specified timeframes and to promptly reinstate their banking services.

“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,” Court added.

The ePayments Code plays a crucial role in the regulation of electronic payment facilities in Australia, and HSBC Australia, as a subscriber, has obligations under this code. On 2 February 2024, Scamwatch released a scam alert on the HSBC Australia impersonation scam. According to the Australian Competition and Consumer Commission (ACCC), Australians lost $2.74 billion to scams in 2023.

ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs. The case underscores the importance of banks in the fight against scams, as Court emphasised,

“All banks need to pull their weight in the fight against scams. We will not hesitate to take court action where we consider banks fail to comply with their obligations to protect their customers,” Court added.