One of the world's largest banks will refund more than $3 million to Australian customers over losses from complicated fixed coupon structured products, following an investigation from the country's financial watchdog.
The Australian Securities and Investments Commission (ASIC) put Citigroup under the microscope to examine how it sold and provided general advice to customers for complex, capital-at-risk investments tied to share performance.
ASIC was concerned elements of Citi's practice may have led some customers to believe it 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," ASIC said in a release today.
"Financial advisers have higher obligations and disclosure requirements when providing personal advice."
As a result of the investigation, Citi stopped selling these products to retail clients under a general advice model at the start of the year, and now it has agreed to refund 114 customers for losses recorded between 2013 and 2017.
In addition, Citi will write to more than 1,000 customers remaining in the products to provide them an opportunity to exit early without cost.
The bank is set to start contacting affected customers soon with expectations remediation will be completed by 10 September 2019.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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