Citigroup will refund A$3m (£1.7m) to retail customers in Australia who suffered losses after being sold complex financial products without proper advice, the country's corporate watchdog said.
The Australian Securities and Investments Commission (ASIC) said it had concerns the bank's financial advisers had sold the complex products without complying with regulatory and disclosure obligations required to provide personal financial advice.
The investment bank has agreed to compensate 114 retail customers for losses they experienced using structured financial products sold by Citigroup between 2013 and 2017. Citigroup will also write to more than 1000 customers notifying them they can exit the investment early without cost.
While Citi maintains the view that none of its actions amounted to a breach of its obligations, Citi has acknowledged ASIC’s concerns and is making a payment to this (small) group of clients"
"While Citi maintains the view that none of its actions amounted to a breach of its obligations, Citi has acknowledged ASIC's concerns and is making a payment to this (small) group of clients," a Citi spokeswoman told Reuters.
The remediation will be finished by September and will be assessed independently. Citigroup will report to ASIC once the remediation program is complete. A spokesperson said it had completed about 75% of the refunds already.
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.