One of Australia's biggest banks sued over scams in landmark case

HSBC Australia is being sued by ASIC in a landmark case over claims it did not adequately shield customers from being scammed out of millions of dollars.

“This is the first case of its kind taken by ASIC. We allege HSBC’s failures were widespread and systemic,” ASIC deputy chair Sarah Court told media today.

Court said she believed ASIC’s case is both the first of its kind levelled against a bank both in Australia and globally.

ASIC alleges HSBC Australia did not have “adequate controls in place to prevent and detect unauthorised payments”, according to documents filed in the Federal Court today.

The corporate watchdog also accused the bank of failing to properly investigate customer reports of fraudulent payments or reinstating banking service within a timely manner. 

ASIC said there was an uptick in scam reports by HSBC Australia around mid-2023 after scammers started obtaining access to accounts by impersonating bank staff.

There were 950 reports of unauthorised transactions between January 2020 and August 2024, totalling around $23 million in customer losses.

About $16 million of these losses happened between October 2023 and March 2024, ASIC alleges.

Many of these scams targeted customers via text message or email, Court said.

“We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers,” Court added.

“We allege that from at least January 2023, HSBC Australia was aware of the risks of unauthorised transactions occurring and that there were gaps in their fraud controls. 

“This resulted in some customers getting scammed out of $90,000 or more.”

Court said the bank took an average of 95 days to restore customer access to their bank accounts.

She alleges one customer did not have access to their bank account for 542 days.

ASIC claims HSBC Australia failed to take necessary action to fulfil its obligations under the Corporations Act and the National Consumer Credit Protection Act.

“We know scammers are constantly looking for new ways to exploit people. Customers can lose their life savings in an instant. Scammers do not discriminate,” Court added.

“All banks need to pull their weight in the fight against scams.

“We will not hesitate to take court action where we consider banks fail to comply with their obligations to protect their customers.”

Court said it was too early to speculate what financial penalties HSBC could face.

HSBC Australia said in a statement that “protecting our customers from scammers remains a top priority”.

“We are considering the matters raised and will continue to co-operate and work constructively with ASIC,” a spokesperson said.

“We continue to make significant investments in our fraud and scam prevention, detection, and response.”