ASIC’s investigation predates the banking royal commission.
ASIC’s concerns centred on how Citigroup’s financial advisers explained the products to clients.
While Citigroup considered its financial advisers were providing general advice to clients when offering the products, ASIC believes that some customers thought Citigroup was providing personal advice in regards to the products.
Under Citigroup’s practices, its advisers asked customers about their personal circumstances, including their tolerance for risk and also provided financial education about benefits and risks to customers who had not previously invested in structured products.
ASIC found that the sale may have amounted to personal advice and that Citigroup’s clients would have benefited from the additional obligations and disclosures afforded to customers receiving personal advice.
A spokeswoman for Citi said it no longer issued the products to Australian retail investors under general advice.
“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 group of clients,” the spokeswoman said.
Citigroup would soon contact affected customers, the spokeswoman said.
The remediation will be finished by September and will be assessed independently. Citigroup will report to ASIC once the remediation program is complete.