HSBC has agreed to cough up just shy of $25m after admitting to failures in protecting customers in Australia from scammers.

The Australian arm of Europe’s biggest lender was investigated by the watchdog over alleged “widespread and systematic failures” to shield its customers targeted by fraudsters. 

The Australian Securities and Investments Commission (ASIC) said it had found HSBC did not maintain adequate controls over its internal transfer systems between May 2023 and May 2024, which exposed customers to a higher risk of unauthorised transactions. 

The regulator said HSBC was aware as early as May 2021 of the growing threat from impersonation fraud, where scammers were posing as HSBC representatives.

“This is one of the first cases of its kind globally and sends ​a clear message that protecting customers from scams is a core ​responsibility of banks,” ASIC chair Sarah Court said.

Both the ASIC and HSBC will jointly-seek approval from the Federal Court for the proposed penalty of $24.6m (£18.5m). 

Court said: “HSBC’s alleged failures left customers more vulnerable to scams, tens of millions of dollars out of pocket and waiting months to find out what had happened to their money.”

HSBC in hot water

HSBC said it had apologised to customers and had already paid some £14m in refunds and compensation.

A spokesperson said: “[The bank] has reached an agreement to resolve the proceedings with ASIC, which recognises our customer ​redress program and the significant enhancements made to ​our fraud ⁠and scam prevention, detection and response.”

It marks the latest regulatory headache for the London-listed lender, which earlier this year fell into hot water in France over a scandal known as ‘cum-cum’ trading.

The FTSE 100 titan was accused of helping foreign investors evade taxes on dividends through the sophisticated financial manoeuvre.

The case related to a series of transactions between 2014 and 2019, which were engaged in by the bank’s French unit, according to an investigation by France’s national prosecution – the Parquet National Financier (PNF).

HSBC reached a €268m settlement with the PNF bringing to an end a long-running probe into the firm’s activity.

Elsewhere, over two years ago the Bank of England slapped the bank with a £57.4m fine for failing to protect customers’ deposits. It followed a hit in 2021 that topped £64m for weaknesses in its anti-money laundering controls.