Citigroup will refund more than $3 million to retail customers who lost money through a product that should’ve only been offered to sophisticated investors.
Citigroup, also known as Citi Australia and Citibank, offered fixed-coupon structured products to retail customers between 2013 and 2017.
As a result of an Australian Securities and Investments Commission investigation, 114 retail customers who suffered losses will be refunded. Citigroup will also contact more than 1000 customers that are still in the products to give them a chance to exit without penalty.
ASIC’s enquiry into the way the products were sold arose concerns that Citi provided general advice to retail investors, which could have been misconstrued as personal advice.
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“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,” stated ASIC.
The structured products put capital at risk and are complex, according to ASIC, and financial advisers have “higher obligations and disclosure requirements” when giving personal advice, as opposed to general advice.
Due to ASIC’s scrutiny, Citi stopped selling the structured products to retail investors in January 2018.
Citi will complete the refunds and exit offers by September 10.
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