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Consumer Action Law Centre CEO Stephanie Tonkin says the $35 million penalty plus costs imposed on HSBC Bank in the Federal Court yesterday sends a clear and resounding signal to Australia’s banks: they must protect their customers from scams.

“As the Australian Securities and Investment Commission (ASIC) case showed, for years HSBC Bank completely failed in its duty of care to protect its customers’ money from scammers, and its inaction saw millions of dollars stolen by criminals, leading to financial ruin for many and untold suffering.  

“Even worse, HSBC Bank offered robbed customers no support, instead blaming and shaming them and covering up low-ball offers of reimbursement with non-disclosure agreements (NDAs),” Ms Tonkin said. 

The Federal Court’s scathing remarks and penalty underscore the seriousness of the harm that was inflicted on hundreds of people and should be a stark warning to other banks. 

In Court, HSBC Bank representatives pointed the finger at the ubiquity of Authorised Push Payment (APP) scams as just a fact of life, rather than owning up to the gross inadequacies of senior management and their own internal safeguards. Meanwhile, Justice Bennett said she was considering a penalty that incentivised bank management to seriously tackle a systemic problem that led to such consumer harm. 

Ms Tonkin said consumer advocates across the country congratulated ASIC for this bold enforcement proceeding, calling out HSBC for its egregious behaviour, and advocates urge the regulator to investigate and point out the infractions of other banks. 

“The stories we heard from the HSBC victims who contacted us were heartbreaking, they were shamed by their bank and denied support when they reached out for help. It was a last-minute about-face by the bank that led to a reduced penalty, which should have been many $millions more. 

Many lost life-changing amounts and then had to take on an adversarial HSBC which fought them tooth and nail. The cases were strikingly similar; HSBC was on notice of the scam and should have stopped the losses far sooner.” 

“Widespread financial crimes are committed via digital platforms, telecommunications services and almost always using banking platforms. At some point major corporations who, unlike consumers, have access to scams intelligence and resources, must invest in protecting their users and customers. This judgment is a very important statement on point.”

Quote attributable to Carol Bennett, CEO, Australian Communications Consumer Action Network (ACCAN):

“Australians lose millions of dollars to devastating and cruel scams every year. The HSBC case is a particularly egregious example of the significant financial and emotional harm that scams can inflict on consumers.

 “We welcome this outcome and congratulate ASIC on its pursuit of this important case. We hope this decision sends a clear message that corporations must take their responsibilities to customers seriously and do more to prevent consumers from being exposed to scam-related harm.”

ENDS

Media contact:

Mark Pearce, mark@consumeraction.org.au Tel: 0413 299 567