Citigroup to refund $3m over product confusion
Citigroup will refund over $3 million to 114 retail customers for losses arising from the sale of complex products.
An ASIC investigation found that Citigroup's financial advisers were offering a product under general advice, but that their conduct may have led some customers to believe that Citigroup was providing personal advice.
The losses arise out of structured product investments offered by Citigroup between 2013 and 2017, ASIC said in a statement.
Apart from refunding over $3 million, Citigroup will write to over 1,000 customers remaining in the products to provide them an opportunity to exit early without cost.
"ASIC investigated Citigroup’s sale and provision of general advice to customers for fixed coupon structured products, which are complex, capital at risk products tied to the performance of reference shares," ASIC said.
It found that Citigroup’s practices included its advisers asking customers about their personal circumstances, such as their tolerance for risk, and providing financial education about benefits and risks to customers who had no previous experience of investing in structured products.
"Financial advisers have higher obligations and disclosure requirements when providing personal advice," said the watchdog.
From 1 January 2018, as a result of ASIC’s investigation, Citigroup ceased selling structured products to retail clients under a general advice model.
Citigroup will shortly start contacting affected customers. The remediation will be completed by 10 September 2019, ASIC concluded.