Citigroup will pay more than $3 million to remediate customers who received general financial advice, believing it to be personal advice.
The group must refund 114 retail customers for losses they incurred after investing in structured Citigroup products between 2013 and 2017. Another 1000 customers will be afforded the opportunity to exit the products early without costs.
ASIC said it was concerned elements of Citi's practice may have been leading customers to believe they were receiving personal advice when in reality Citi had only provided general advice over its structured product offering.
According to the regulator, Citi's advisers had asked customers about their personal circumstances, such as their tolerance for risk. However the regulator pointed out that advisers have "higher obligations" and disclosure requirements when providing personal advice.
Citi's remediation issue comes just weeks after ASIC released a report saying consumers are confused by the different types of financial advice. ASIC deputy chair Karen Chester said the gap in understanding meant many consumers were under the false premise their interests were being prioritised, "when no such protection exists."
After ASIC's investigation, Citi stopped using a general advice model to sell its structured products in January 2018.
The regulator confirmed Citi's remediation efforts would begin "shortly" and be complete by 10 September. The remediation will be independently assured and Citi will report to ASIC once complete.