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Fear of regulator panic as it probes structured products

The FSA has revealed the extent of its concerns about structured products in a questionnaire asking IFA firms to detail their ability to meet potential misselling claims.

The 15-point questionnaire was sent out last week and firms were asked to return it within 24 hours. It asks for an assessment of their overall financial position, including solvency and potential ability to meet claims from investors. It also requests information on other liabilities, including split-capital investment trusts.

Most of the questionnaire is concerned with assessing firms&#39 past sales, asking for the total value of structured product business since Jan-uary 1998, how many complaints firms have already received and redress paid.

It even requests a breakdown of direct and advisory sales in addition to the number of referrals that have been made to the Financial Omb-udsman Service. It asks what stage compensation claims are at and requests information on firms&#39 PI position – including excess – and whe-ther their insurers have acc-epted the notification.

IFAs believe the FSA is trying to establish what impact misselling claims could ultimately have on the Financial Services Compensation Sch-eme but the FSA says it is simply following up its initial investigation.

One IFA says: “There is a degree of panic within the FSA about potential liabilities and what they could do to the FSCS following what happened with Towry Law.”

FSA spokesman Rob McIvor says: “This is becoming an issue of greater interest and we are just taking the temperature. We can&#39t make decisions in the dark. It is not specifically about the FSCS.”

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