Société Générale is to pay $11m to clients after the bank failed to inform them about the full fees and charges for over-the-counter bonds, options and structured notes (OTC products).
The Hong Kong Securities and Futures Commission (SFC) reprimanded the bank’s Hong Kong branch for the fault in internal controls in its wealth management activities.
Customers either paid or received different prices for OTC products, which appear to be different to what had initially been agreed. This was either variable or excessive and the rest of the money was retained by Société Générale as a fee, the HKSFC said.
The incorrect fees related to more than 3,000 transactions between April 2003 and January 2006.
Independent reviewer to decide pay-out
Société Générale settled the case without admitting liability but agreed to reimburse its affected customers.
The SFC, who raised concern about inadequacies in Societe Generale’s guidelines, procedures and policies to ensure disclosure of margins, said that although the bank was at fault, they were now rectifying the issue by reimbursement.
A Société Générale spokeswoman told PBI that the bank took the subject of customer information and internal controls “very seriously” and since 2006 has taken action to enhance its procedures.
The spokeswoman refused to disclose the number of customers that had been affected but said that the bank is planning to engage an independent reviewer to assess the amount that should be paid out.