The London-based bank’s Australia unit admitted to a series of shortcomings that included an absence of adequate controls on its internal transfer system and delays in investigating fraud cases, according to a statement from the Australian Securities and Investments Commission.
ASIC and HSBC will on Thursday ask the Federal Court to find that HSBC broke the law and impose the penalty, according to the ASIC statement. HSBC has established a large-scale remediation program and has already paid around A$21.5 million in compensation, with more to come, the statement said. HSBC has also recovered A$6.5 million and returned those funds to customers.
“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 in the statement. “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.”
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An HSBC spokesperson said the settlement agreement is subject to approval by the federal court.
“We apologise to our customers who were impacted by these events. 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.”
Some customers reported having to borrow money from elsewhere, taking on extra shifts at work, or fearing they would struggle to meet their home loan repayments, ASIC said. Others reported distress and panic amid the stress of being unable to access their money or accounts, the ASIC statement said.
The issues center upon more than 1,000 reports on unauthorized transactions totaling around A$35 million between January 2020 and August 2024, which included impersonation scams, where criminals pretended to be HSBC staff. The bank also admitted to having inadequate systems to inform customers about how to regain access to their accounts after they were locked.
The episode underscores the regulatory risk facing banks as they grapple with scams and frauds perpetrated by criminals with access to increasingly powerful technology. The penalty also comes as HSBC looks to offload its Australian retail banking business, with potential suitors reportedly including National Australia Bank Ltd., according to the Australian Financial Review.
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