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06 June 2011

FT: FSA issues warning on structured products

The FT reported that investment products described as "guaranteed", "protected" or "secure" may have to carry an explanation stating exactly what these terms mean, in the latest warning from the Financial Services Authority that financial companies are not properly advertising risk to consumers.

So-called structured products, which offer people exposure to the stock market with some level of protection, were being promoted “without any clear and adequate justification for the descriptions used”, the regulator said in a quarterly consultation paper on Monday. It has proposed introducing guidelines that would force financial services companies to explain the use of terms such as “guaranteed” in advertisements or factsheets.

Structured products are increasingly being marketed by banks and wealth managers to consumers who are tempted by the headline rates on offer at a time when returns on cash are still close to zero.

Full article (FT subscription needed)

© Financial Times

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