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Five firms fall foul of FSA in structured crackdown

Five firms in the last six months released structured product advertising material “so bad” that the FSA required the firms to contact investors and offer them the opportunity to pull out of their investments.

The FSA has released figures outlining structured products advertising complaints it has received over the past six months, showing it dealt with 300 cases of misleading advertising, 118 of which were referred to it by the public.

FSA spokeswoman Kate Bristowe says the five firms with the worst marketing material were required to write to investors explaining the risks fully.

The FSA would not name the firms, nor say whether they are distributors or providers, as none of the cases reached FSA enforcement proceedings. It did say that at least one case was an advice product.

In the past six months, the FSA has required 78 advertisements to be changed because the content was not compliant.

The news comes as the regulator releases clarification of its advertising and promotion rules for structured products.

FSA group manager conduct of business standards Norman Digance says the FSA has toughened up the factsheet for high income to include growth products. It will require providers and intermediaries to develop tailored risk warnings for structured products.

Digance says: “Where an advertisement is for a specific structured product we will now require a tailored risk warning.”

Aifa director general Paul Smee says: “I am sure that specific risk statements will be far better for the consumer and protect the adviser far more than general risk statements.”

Bristowe says: “The firms that produced the worst marketing material were required to write to investors and offer them the opportunity to pull out of their investments. The tightening of the promotion rules are aimed at avoiding this behaviour.”


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