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BFCSA: Citigroup to refund $3 million after ASIC warned they "overstepped" the mark on general advice!!

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Citigroup to refund $3 million after ASIC investigation

Australian Financial Review Apr 15, 2019 — 6.15pm

James Fernyhough


Citigroup will refund more than $3 million to 114 customers, after an investigation by the Australian Securities and Investments Commission found the bank's financial advisers had over-stepped the limits of general advice.

The refund relates to structured product investments sold between 2013 and 2017. On top of the refunds, Citigroup will write to more than 1000 customers still in the products,  giving them the chance to exit without cost.

ASIC said the fixed-coupon structured products were "complex, capital at risk products tied to the performance of reference shares".

It found that although 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".

ASIC said Citigroups advisers had asked customers about personal circumstances such as risk tolerance, and provided "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," ASIC said.

General advice cannot take into account a customer's particular circumstances, such as objectives, financial situation and needs, and can be provided by people who are not licensed financial advisers.

Licensed financial advisers are bound by much more stringent rules, including the best interests duty, many of which were brought in under the 2013 Future of Financial Advice reforms.

ASIC said Citigroup would "shortly" start contacting affected customers and that the remediation would be completed by September 10. Citigroup no longer sells the products.



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