HSBC Ordered to Pay $35M Penalty for Scam Protection Failures, June 19

Australia’s Federal Court ordered HSBC to pay $35 million AUD on June 18 after the bank admitted to serious failures in protecting customers from scams. Between January 2020 and August 2024, HSBC received over 1,000 reports of unauthorised transactions totalling $34.6 million AUD. Justice Elizabeth Bennett approved the penalty jointly submitted by HSBC and regulator ASIC, marking one of the first cases of its kind globally.

What HSBC Admitted

HSBC admitted it failed to maintain adequate controls on its internal transfer system between May 2023 and May 2024. The bank also acknowledged it knew about impersonation scams since May 2021 but did not implement key controls. Reports of unauthorised transactions surged 380% in 2023 and 2024, driven largely by scammers posing as HSBC staff via text and phone calls.

Delays in Investigating Customer Complaints

HSBC admitted that investigations into scam reports took an average of 144 days to complete, breaching its financial services licence obligations. The bank also failed to provide adequate systems to help customers regain access to accounts that scammers had locked. Justice Bennett found HSBC’s failures widespread and systemic, with some customers reporting stress and frustration during the complaint process.

Compensation and Remediation

HSBC has already paid approximately $21.5 million AUD in customer compensation and recovered $6.5 million AUD that has been returned to affected customers. The bank expects to complete all remaining customer payments by July 2026. Justice Bennett noted the penalty was somewhat on the lower side, but both ASIC and HSBC cited the bank’s cooperation and avoided trial as reasons for the discount.

Industry-Wide Message

ASIC Chair Sarah Court said the ruling sends a clear message to the banking industry. Banks must have adequate controls and ensure interactions with scam victims help rather than hinder. The case represents one of the first times a financial institution has been held legally accountable for scam prevention failures rather than simply for losses incurred.

Final Thoughts

HSBC’s $35 million penalty signals regulators will hold banks accountable for inadequate scam protections. The ruling sets a precedent for the global banking industry and underscores the cost of failing to implement timely fraud controls.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.