societe generale to repay 11m to customers

French banking giant Société Générale is to repay more than $11m to customers in Hong Kong after the City watchdog reprimanded it for overcharging on certain over-the-counter investment products sold by its wealth management division.

societe generale to repay 11m to customers

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The Securities and Futures Commission said “internal control failings” in the company’s wealth management activities led to fees or charges not being disclosed to customers which in some cases were deemed “excessive” by the regulator.

In a statement, the SFC said it was concerned that in more than 3,000 transactions, which took place between April 2003 and January 2006, customers of Société Générale’s wealth management division “paid or received a different price for OTC products from the actual price transacted for them by Société Générale with the difference, or margin, being retained by Société Générale as a fee”.

The SFC added that the fee was “variable and in some cases, excessive” and was never disclosed to customers, either as a fee or as commission in the resulting contract note issued to each customer.

In addition, the SFC raised concerns that internal controls and systems within Société Générale’s wealth management activities had failed to ensure customers were fairly treated in transacting OTC products in the secondary market, that there were inadequate policies, procedures and guidelines to ensure margins were disclosed and appropriate in each case and that conflicts of interests were properly managed.

Mark Steward, executive director of enforcement at the SFC, said: “These fees should not have been charged or taken without clear agreements and disclosure. Société Générale is doing the right thing now in reimbursing its customers.

“Regulated corporations must have proper policies and procedures to ensure that their customers are fairly, honestly and professionally treated. Relevant fees and charges need to be agreed and disclosed to customers.”

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