Essentially, what was happening, so far as the bank was concerned, was that salesmen were saying "this is a car. If you want it, I can sell it to you" but so far as Aussie regulator ASIC was concerned, at least some of the customers were hearing "this is a car that is designed for your family to keep them safe, comfortable and to get you where you want to go without getting wet when it rains."

The reason that ASIC came to that conclusion was because Citi's salesman conducted what the investment industry has long called, in mangled English, a "fact find." This was developed, primarily, in relation to the UK's Financial Services Act 1986 which placed an obligation on companies selling investments to find out about the customer and to ensure that "products," as they came to be known, were sold in the best interests of the customer. Indeed, it was this that began the move towards Know-Your-Customer (which is what "fact finds" were more properly known) that, ultimately, turned into KYC for money laundering risk management purposes.

According to ASIC, "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. " That, ASIC concluded, went far beyond the generic information about products that counts as general advice. There is an important reason: those providing general advice (which Citigroup ceased to do in respect of structured products after ASIC began its investigation) are subject to a lower duty of care in relation to various obligations and disclosures than those providing personal advice.

Citigroup will refund more that AUD3m to 114 customers so far identified and will review all other relevant accounts, reporting to ASIC before 10 September this year.