HSBC apologises to scam victims after agreeing to $35m fine
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More news: HSBC has apologised to customers “who were impacted” after admitting to failures in protecting them from scammers impersonating employees.
Corporate regulator ASIC commenced civil penalty proceedings against HSBC on 16 December 2024. On Thursday, ASIC said it had reached an agreement with HSBC and the pair would jointly ask the Federal Court to issue a $35 million penalty.
“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,” an HSBC spokesperson said.
HSBC agrees with ASIC to $35m fine for scam protection failures
The news: HSBC has admitted to serious failures in protecting customers from thousands of dollars in scam losses and will jointly ask the Federal Court, with corporate regulator ASIC, to impose a $35 million penalty.
The numbers: Between January 2020 and August 2024, HSBC received more than 1,000 reports of unauthorised transactions worth a collective $34.6 million. Scammers were defrauding customers by impersonating HSBC employees.
HSBC has also established a large-scale remediation program following ASIC’s investigation, with $21.5 million in compensation already paid. A further $6.5 million has also been recovered on behalf of customers.
The context: HSBC has admitted to breaching its financial services licence obligation due to major delays in investigating reported scam cases, which took an average of 144 days to finalise.
The bank also admitted to having inadequate controls on its internal transfer system between May 2023 and May 2024 and inadequate systems to inform customers how to regain access to accounts that were locked after reporting a scam.
HSBC also admitted it was aware from May 2021 of the growing risk of impersonation scams and that reports of unauthorised transactions by HSBC lifted roughly 380% in 2023 and 2024, driven by impersonation scams.
The proposed fine and finding that HSBC contravened the law is still subject to approval of the court.
What they said: “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.
“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.”
The source: ASIC media release
