Citigroup will also write to over 1000 customers remaining in the products to provide them an opportunity to exit early without cost.
ASIC investigated Citigroup’s sale and provision of general advice to customers for fixed coupon structured products, which the regulator described as “complex, capital at risk products tied to the performance of reference shares”.
ASIC was concerned that while Citigroup considered its financial advisers to be providing general advice, elements of its practice may have led some customers to believe that Citigroup 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. 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.
Citigroup will shortly start contacting affected customers. The remediation will be completed by 10 September 2019, will be independently assured and Citigroup will report to ASIC once the process is complete.
