Citigroup (NYSE: C) has been struggling to rebound since the financial crisis, but making steady improvement as it sheds non-core assets. The firm is shifting away from the supermarket style banking model that made it famous, and also made it both too big to fail, and too big to manage.
A review of Citicorp Insurance Agency Inc., Citicorp Investment Services, and SBHU Life Agency Inc. found clients had their policies or contracts replaced after receiving inaccurate or insufficient information about the products and fees, the state Insurance Department said today in an e-mailed statement. As a result, Citigroup affiliated insurance agencies paid $2 million in fines for duping consumers of retirement and wealth-management products, a New York State regulator said. James Wrynn, Superintendent commented, “This major fine reflects the seriousness of these violations. It is imperative that consumers, especially seniors, receive a full explanation of the pros and cons of replacing a life insurance policy or annuity contract so they are not financially harmed.” The agencies agreed to address violations, fix their complaint processes and file reports with the department outlining their efforts, Wrynn said. Citigroup, based in New York, is the third-biggest U.S. bank by assets.
Citi has managed to steer clear from the foreclosure mess embattling Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC), but is sure to receive negative press from this event in the coming weeks. Pandit’s team has accomplished more in his short time at the helm then former CEO Chuck Prince did in many years, leaving investors more likely dismiss this as a small one time event rather than emblematic of a larger underlying control problem.
