HSBC Holdings plc’s HSBC Australia unit, HSBC Bank Australia, has been sued by the Australian Securities and Investments Commission (“ASIC”) for failing to protect its customers from losing millions of dollars in scams.
ASIC’s Findings and Allegations Against HSBC Bank Australia
According to ASIC’s report from Monday, HSBC received approximately 950 reports of fraudulent transactions between January 2020 and August 2024, which resulted in a total loss of around A$23 million ($14.6 million) for its customers. Of this total amount, almost A$16 million ($10.2 million) was lost during the six months starting from October 2023 to March 2024.
ASIC added that HSBC takes around 145 days to investigate complaints related to scams that are lodged by its customers.
HSBC Australia failed to have adequate controls in place to prevent and detect unauthorized payments and failed to comply with its obligations to investigate customer reports of unauthorized transactions within the specified timeframes required and to promptly reinstate their banking services in a timely manner, per the ASIC report.
Sarah Court, ASIC’s deputy chair, said, “We allege HSBC Australia’s failings were widespread and systemic, and the bank failed to protect its customers.”
In the same report, ASIC stated that the regulator is requesting declarations of contraventions, pecuniary penalties, adverse publicity orders and costs. These measures aim to hold the companies accountable for wrongdoings and prevent similar misconduct from repeating in the future.
HSBC’s Response to ASIC’s Legal Action
HSBC acknowledged the claim made by ASIC and stated, "We are considering the matters raised and will continue to co-operate and work constructively with ASIC." HSBC’s spokesperson stated, “Protecting our customers from scammers remains a top priority. We continue to make significant investments in our fraud and scam prevention, detection, and response.”
HSBC’s Zacks Rank & Price Performance
In the past six months, HSBC’s shares have gained 11.2% against the industry’s decline of 5.4%.
Image Source: Zacks Investment Research
Currently, HSBC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Litigations Faced by Other Foreign Banks
Earlier this month, Barclays PLC BCS agreed to pay $19.5 million as settlement charges in a lawsuit filed by shareholders in Manhattan. The company was accused of securities fraud as it sold $17.7 billion in debt above the regulatory limit. This was reported by Reuters.
Shareholders claimed that they faced monetary loss by relying on BCS’ assurances concerning its policies and procedures. The bank asserted it adhered to regulatory standards and remained committed to strong internal controls.
In September 2024, The Toronto-Dominion Bank’s TD U.S. broker-dealer unit, TD Securities USA, agreed to pay more than $20 million in a settlement with U.S. authorities over allegations of manipulations of the U.S. Treasuries market.
TD will pay a criminal penalty of $12.5 million to settle civil investigations by the SEC and the Financial Industry Regulatory Authority.
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