Headline rate chasing has no future in structured market, says Blue Sky
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Headline rate chasing structured product providers have ‘no place and no future’ in the industry, according to Blue Sky Asset Management.
In its response to the FSA’s review of the structured products Industry, the firm says the regulator has taken a “necessary and informed stance” in delineating between the past and pointing to the future for the sector.
That future, says Blue Sky must mean ‘‘the end for simplistic headline rate driven marketing of ‘easy products’.”
Chief executive Chris Taylor says the output from the regulator has left little doubt as to the immediate lessons for the industry as a whole.
He says: “The guidance to providers is crystal clear - investors and advisers must be presented with information that ensures they understand what they are investing in and any risks of doing so, specifically detailing counterparty risk, any market risk, liquidity risk and compensation scheme rules, in language that the target audience can understand.
“The guidance to advisers is equally clear – in respect of the standard of advice that it expects them to meet.
“Structured products are suffering from advisory issues that are generic and far wider financial services industry issues. But, the opportunity is now presented for the structured product industry to respond positively, and to demonstrate its value and its integrity.”
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Readers' comments (2)
Evan Owen | 5 Nov 2009 10:41 am
RJ Temple started the 'headline chasing' madness and the manufacturers were only too happy to oblige when rates of 10 or 12% were demanded by the direct offer letter crowd.
For every boil on the face of FS there is an underlying cause that regulators fail to spot until it is too late. What is urgently needed is some street-wise regulators who have worked at the coal face.
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Phil Castle | 5 Nov 2009 12:16 pm
Lets remember the FSA pulled the client facing Fact sheet about "High Income Products" in April 2008 and has not replaced it yet and when searching for the word "counterparty" their Moneymade clear client facing website does not even come up in their Jargon Buster section!
http://www.moneymadeclear.fsa.gov.uk/
The report whilst quite good only looked at it from the perspective of the failings of some firms and not at the FSAs own failings on structured products........ Bearing in mind they never accept liability for anything, I can't see what harm a FULL report would do and an admission of some of their own failings.
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