HSBC's Australia unit faces $24.6 million penalty over scam protection failures
HSBC's Failures and Regulatory Actions
Admission of Serious Failures and Potential Penalty
June 18 (Reuters) - HSBC's Australia unit has admitted to serious failures in protecting customers from scams and could face an A$35 million ($24.59 million) penalty pending court approval, Australia's corporate regulator said on Thursday.
The Australian Securities and Investments Commission (ASIC) and HSBC will jointly seek the Federal Court's approval of the proposed penalty.
Details of ASIC Investigation
Inadequate Internal Controls
The ASIC said its investigation found that 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.
Awareness of Scam Threats
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.
HSBC's Response and Industry Impact
HSBC's Lack of Immediate Comment
HSBC was not immediately available for comment when contacted by Reuters.
Global Significance of the Case
"This is one of the first cases of its kind globally and sends a clear message that protecting customers from scams is a core responsibility of banks," ASIC Chair Sarah Court said.
Regulatory Findings and Customer Impact
Breach of Financial Services Licence
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.
Insufficient Customer Support Systems
The bank also had insufficient systems to help customers regain access to accounts that had been locked after scam incidents, ASIC said.
Next Steps and Court Approval
Federal Court's Role
The proposed settlement remains subject to approval by the Federal Court, which will determine whether the penalty and other orders are appropriate.
Currency Exchange Rate
($1 = 1.4235 Australian dollars)
Reporting Credits
(Reporting by Anjali Singh in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)
