View more on these topics

Absolute funds confuse public and advisers

The FSA says there is a risk of absolute return funds being missold as advisers may not fully understand the products.

The regulator published its retail conduct risk outlook paper this week, which sets out what the FSA sees as the most significant risks in the retail investment market over the next 18 months.

The FSA says there is a risk consumers do not understand absolute return funds and believe there is an element of capital protection or guarantee of a positive return. It says consumers may suffer significant loss if they are sold funds that fail to perform.

The FSA says: “Advisers may not fully understand these products, which increases the possibility that poor communication of investment risks contribute to misselling to consumers.”

The FSA is carrying out work to assess the extent of the risk.

Legal & General Investments managing director Simon Ellis says: “The industry needs to find a better way to describe these funds.”

Recommended

Aviva backs the UK as life and pension profits rise

Aviva UK Life chief executive David Barral says the company is committed to staying in the UK after revealing a 6 per cent rise in group operating profits last year to £2.5bn. The preliminary results last week show UK long-term savings sales rose from £10.3bn in 2010 to £11.3bn last year. UK life and pension […]

Towry non-exec chairman Glyn Jones quits

Towry non-executive chairman Glyn Jones has left the firm after more than five years in the role. Jones, who was appointed in November 2006, will be replaced by non-executive director Gerald Corbett. In October, Towry head of risk and compliance Nick Anderson quit after 13 years at the firm. Towry chief executive Andrew Fisher says: […]

MM Profile: David Ferguson

The chief executive of Nucleus believes a significant chunk of investments will find its way on to platforms in the next decade and the industry is unquestionably on the path to unbundled charges Interview by Rachael Adams

9

FSA sounds misselling risk over absolute return funds

The FSA says absolute return funds pose a misselling risk as advisers may not have a proper understanding of the products. The regulator’s latest Retail Conduct Risk Outlook paper, published today, says consumers may not understand the complexities of absolute return funds and may believe there is an element of capital protection, or guarantee of […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment