View more on these topics

Banks face FSA probe as Bond investors lose cash

Major banks such as Lloyds TSB look set to bear the brunt of FSA action over structured products after the regulator admitted that high-street retailers rather than IFAs may be guilty of misselling.

The FSA is investigating sales of index-linked bonds amid fears that thousands of products maturing this year will fail to return capital to investors. The regulator believes that many investors may have been unaware that stockmarket falls could leave them empty-handed.

It had been widely assumed that IFAs would be the targets of the regulator&#39s probe after it sent a letter to product providers last year asserting that most bonds were sold by IFAs. But the FSA has now admitted that banks are far more likely to face enforcement action.

The biggest loser is liable to be Lloyds TSB, which sold through its branches a large number of Scottish Widows&#39 ailing extra income & growth bonds, which account for around 20 per cent of the £5bn market.

Lloyds TSB has already been ordered by the Financial Ombudsman Service to compensate one bondholder on the basis that its literature was misleading and, with hundreds of complaints still pending, could face a huge compensation bill.

Another bank in the firing line could be HSBC, which sold a fixed-income Pep which requires the FTSE 100 to rocket 65 per cent by this April to avoid capital loss.

FSA spokesman Rob McIvor says: “This is not a nasty IFA story. There may well be misselling with the high-street companies. It could be that there is a need for enforcement action.”

Lloyds TSB spokeswoman Helen Thompson says: “We obviously work very closely with the regulator and listen to what it says. But in terms of the ombudsman, there were 15 warnings on the product literature.”

•Investment, p34


Stripped bare of Lady Godivas

Everyone wants free cash and hunters of alpha value could have done worse than getting themselves sent to Coventry during the five-day bonanza when computer problems saw its ATMs giving out used Lady Godivas.Stretching its TLC not PLC strapline to the extreme, Coventry Building Society has left us all thinking, how honest are we, with […]

Zurich protects profits on bond

Zurich Financial Services is offering a protected profits fund for investors in its sterling bond and Isa range that allows investors to switch from equities to cash and guarantees the final value of the fund.Developed with Barclays Capital, the sterling protected profits fund guarantees to pay out at least 80 per cent of the fund&#39s […]

Twefs reborn as Children&#39s Mutual

Tunbridge Wells Equitable Friendly Society is changing its 122-year-old name as it relaunches itself as Children&#39s Mutual.Under the new brand, the society aims to provide support services and investment veh-icles for parents and IFAs to create portfolios for children.The move comes after consumer research showed more people claimed to recognise the then non-existent Children&#39s Mutual […]

HSBC – Capital Protected Growth Bond

Monday, 20 January 2003 Type: Capital protected bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment: £3,000-no maximum Term: Six years Guarantee: Capital returned in full regardless of the performance of the index Return: Up to 100% growth in the FTSE 100 index Closing date: March 7, 2003 Commission: Initial […]

Show me the money – earnings are central to performance in Europe

Equity markets globally currently remain vulnerable to sharp shifts in sentiment caused by either unexpected or unwelcome outcomes in key upcoming political events (the US and German elections, Brexit and the Italian referendum). These top-down influences, combined with the current low global growth environment, will likely lead to broadly directionless markets, and prolong the current low beta return environment. We do, though, […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm