The FSA said last week that structured promotions which use descriptions including safe, secure, protected and guaranteed have to explain clearly and unambiguously what they mean. It said claims of potential benefits must be balanced with fair and prominent indication of relevant risks.
AWD Chase de Vere senior manager Jason Walker says: “There are quite a few open-ended investments that use the words protected and secure and enterprise investment schemes which use the same sort of terminology. We will point out to companies we are concerned about the use of these terms based on what the FSA has said about structured products.”
Walker says AWD will emphasise in suitability letters to clients that although the investment is suitable for their risk profile, it is not comfortable with the wording of the literature.
He says: “I do not think the FSA will be proactively looking at this now because they probably have their hands full but in a year or two they might.”
An FSA spokesman says: “You need to be clear exactly what you mean when you talk about guaranteed or secure.”