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.