Call for FSA to restrict structured product sales to sophisticated investors
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The FSA should restrict sales of structured products to sophisticated investors, specialist provider Altus Financial Products has warned.
Altus argues that until UK investors fully understand the risks involved, structured products are not suitable for most retail investors. It claims the FSA did not go far enough in its guidelines on the sector.
Altus partner and founder Hercules Anastase says: “During 2009 high potential returns were possible from simple FTSE 100 structures. However, with volatility collapsing, the recent rally in equity markets, interest rates at virtually zero and with an improvement in bank credit levels, those returns will not be achievable again in 2010. This means more complex and sophisticated products with greater inherent risk are required to achieve greater potential returns.”
Anastase adds: “Until there is evidence of a greater level of understanding in the UK retail market of the risks associated with investing in these types of investments, their sales should be restricted. These more complex products are not appropriate in a retail market where volatility, correlation risk, delta, interest rate risk and soft-capital protection barrier risk are understood by few.”
Altus Financial creates bespoke structured investment products for high net worth individuals.
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Readers' comments (4)
John Blackmore | 19 Jan 2010 10:15 am
Why not just restrict the sale of complex/potentially dangerous products to IFAs who have Q level 6 qualifications or better and leave the other 95% of us to carry on selling simple but Regulated Products with no need for Q level 4 nor requirement to change to Fees.
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Simon Mansell | 19 Jan 2010 10:34 am
Eating, poor diet, public smoking and law and order is where the Nanny State should end – that is unless the FSA wants to even regulate the foor we eat! Consumer protectionism practiced by the biggest fatest Nanny of them all (the FSA) removes or controls free choices and infringing upon personal privacy. People have a right to make mistakes and the history of the FSA proves it unable to control or regulate any event other the normal practice of day to day financial advice.
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Peter Turner | 19 Jan 2010 11:11 am
Simon, I think you'll find the food regulator is the Food Standards Agency - commonly referred to as the FSA!
Don't you just love TLAs.
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Anonymous | 19 Jan 2010 11:42 am
Actually, it might be better for everyone involved if the FSA restricted unknown companies and individuals issuing headlines that are anything but useful - designed for their own publicity and profile purposes. Altus who ? Exactly !
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