Citigroup to refund over $3 million to clients following sale of complex productsChristian Fernsby ▼ | April 15, 2019
Following an ASIC investigation, Citigroup will refund over $3 million to 114 retail customers for losses arising out of structured product investments offered by Citigroup between 2013 and 2017.
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 was concerned that while Citigroup considered its financial advisers to be providing general advice, elements of its practice may have led some customers to believe that Citigroup was providing personal advice.
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.
From 1 January 2018, as a result of ASIC’s investigation, Citigroup ceased selling structured products to retails clients under a general advice model.
Citigroup will shortly start contacting affected customers.
The remediation will be completed by 10 September 2019, will be independently assured and Citigroup will report to ASIC once the process is complete. ■