HSBC: Australian Regulatory Authority Takes Court Action Over Fraud Allegations

The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against HSBC, accusing the bank of "extensive and systematic failures" in protecting its customers from fraudsters. This comes at a time when governments and regulators worldwide are debating who should be held accountable for losses due to consumer fraud. Between 2020 and 2024, HSBC Australia customers suffered losses totaling 23 million Australian dollars, with individual customer losses exceeding 90,000 Australian dollars. Sarah Court, Deputy Chair of ASIC, emphasized that the agency is seeking significant penalties to remind HSBC and the entire banking sector of their obligation to better protect customers from fraudsters. While ASIC closely examined banks' responses to fraud cases, the lawsuit is exclusively directed at HSBC. This is the commission's first such lawsuit against a financial institution concerning fraud offenses. An HSBC spokesperson stated that the bank is reviewing the matters raised and intends to cooperate with the regulatory body. The British bank has recently been targeted by regulators multiple times, including a 57.4 million pound fine from the Bank of England in January and a 64 million pound fine for deficiencies in money laundering prevention in 2021. Between 2020 and 2024, HSBC Australia registered 950 complaints about unauthorized transactions, mostly occurring between October 2023 and March of this year. Many fraud attempts were conducted via SMS or calls where perpetrators posed as bank employees. ASIC accuses HSBC of having identified the problem as early as January 2023 but responding too slowly. Investigations into unauthorized transactions took an average of 145 days, while freezing accounts caused additional complications for customers. Lastly, Sarah Court emphasized the damage that online fraudsters can cause and urges all banks to commit more strongly to protecting their customers, following the 2.7 billion Australian dollars lost by Australians to fraud last year.