Citigroup to refund $3 million for general v personal advice blurring
A major bank has been ordered to refund over $3 million to 114 retail customers, after an Australian Securities and Investments Commission (ASIC) investigation stemming from concerns that customers believed they were receiving personal advice when it was in fact general.
The regulator believed that elements of Citigroup’s practice led to the confusion, after looking into the bank’s sale and provision of general advice for an inherently risky and complex offering, fixed coupon structured products.
The specific practice elements included advisers asking customers about their personal circumstances such as their tolerance to risk, and then providing financial education about the products’ benefits and risks to customers who had no experience in investing in structured products.
The compensation ordered by ASIC reflects losses to customers arising from making those investments from 2013 – 2017, with the bank also ordered to write to a further 1,000 customers remaining in the products to allow them to exit early without costs.
The remediation process would be completed by 10 September, this year, and the bank stopped selling structured products to retail clients under a general advice model in January, last year as a result of the ASIC investigation.
AUTHOR
Hannah Wootton
Recommended for you
VBP consultant Sue Viskovic has warned advisers thinking of going self-licensed that they need to act “from a business head, not an adviser head” when it comes to scaling up their practice.
An inquiry is due to probe the collapse of Dixon Advisory and its impact on the Compensation Scheme of Last Resort.
A report has highlighted a growing appetite among high-net-worth individuals for private market investments, creating a significant opportunity for advisers.
The two firms have announced a new online development program to support career changers, advice support staff and university graduates in joining the financial advice profession.
