The Australian Securities and Investments Commission is taking legal action against HSBC Australia for failing to deal with financial scam victims adequately.
The regulator claims the bank failed to deal with approximately 950 reports from scam victims, equating to an estimated AU$1m in lost funds.
ASIC alleges HSBC Australia failed to have adequate controls in place to prevent and detect unauthorised payments and failed to comply with its obligations to investigate customer reports of unauthorised transactions within the specified timeframes required, and to promptly reinstate their banking services in a timely manner.
HSBC averaged 145 days to respond to requests relating to unauthorised payments and transactions, according to the regulator.
ASIC Deputy Chair Sarah Court said, ‘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 AU$90,000 or more.
“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.
“We are also concerned that HSBC Australia failed to promptly restore customers’ full access to their bank accounts, on average taking 95 days to do so. One customer did not have full access restored for 542 days.”
“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,” she added.
ASIC is seeking declarations of contraventions, pecuniary penalties, adverse publicity orders, and costs.
