The losses arose out of structured products offered between 2013 and 2017, ASIC said in a statement. Citigroup will also write to over 1,000 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 retail 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.
Typical, not even a slap on the wrist for the big boys. If that had been a small advice group, the planners would have been banned and the place shut down. Go the big bully with its big end of town mates.
Gee Citibank, which genius signed off on that idea??
ISA ‘general advice is no different especially when telling clients to roll over other funds to them, still product advice that needs thorough investigation.
Well done ASIC! Great work.
As an adviser who gives personal advice, it is so frustrating seeing firms abuse the conditions of general advice. They would have known they were flouting general advice rules but didn’t count on getting caught red handed. Talk about dodgy and unethical.
Surely management’s position is untenable.
The sooner the word advice is removed from general advice the better.
I recall a mortgage broker telling me that when they recommended Citi as a lender to overseas clients, Citi required $2.5M in cash to sit with one of their products as a type of guarantee, but that the broker was confused why Citi was offering an investment commission to the advisers that were recommending this. Ridiculous and needs to be outlawed
What about Private bankers selling bank Hybrids to clients under “general advice?”
Because these morons at ASIC have invented (mind you at the request of Banks & ISA’s ) this complete loop hole of General Advice, so of course the institutions have profited from its dodgy practise.
ASIC must shut down this General Advice rubbish immediately.
It’s either General Product Information, with very clear warnings that Personal Advice should be sought. Or it’s real Advice.
And what about ISA’s massive General Advice practices, wonder if the holier than god ISA General Advice wrought ever gets looked at by ASIC ?
Another large corporate caught with its nose in the trough and management live on for another day. In the meantime, ASIC bans another suburban adviser. Big, tough regulator in action.
How could an AFSL think that its “advisers” offering specific investments to known clients could possibly constitute ‘general advice?’