HSBC’s Australia unit has admitted to serious failures in protecting customers from scams and could face a $24.6 million penalty pending court approval, according to Australia’s corporate regulator.

Regulatory Action

The Australian Securities and Investments Commission (ASIC) and HSBC will jointly seek the Federal Court’s approval of the proposed penalty. The ASIC said its investigation found that HSBC failed to maintain adequate controls over its internal transfer systems between May 2023 and May 2024, exposing customers to a heightened risk of unauthorized transactions.

The bank was also aware as early as May 2021 of a growing threat from impersonation scams in which fraudsters posed as HSBC representatives, ASIC said. The regulator added that HSBC breached its financial services licence obligations by failing to adequately prevent scams and by taking an average of 144 days to investigate customer reports.

HSBC also had insufficient systems to help customers regain access to accounts that had been locked after scam incidents, ASIC said. An HSBC spokesperson stated that the bank has reached an agreement to resolve the proceedings with ASIC, which recognizes its customer redress program and the significant enhancements made to its fraud and scam prevention, detection, and response.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.