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FSA renews high-income warning

The FSA has issued a new warning that consumers should be aware of the level of risk in high-income products.

It says investors must understand that if the associated stockmarket index falls significantly, they can lose some or all of their capital.

Providers currently offering such products include GE Life, EuroLife, Inora Life, NDF Administration and Scottish Life International.

The latest FSA warning follows a similar alert issued on these types of products in December 1999.

However, providers have defended the bonds, claiming the risk is clearly spelt out in the product literature.

FSA consumer division director Christine Farnish says: “High-income products offer impressive headline rates of return but customers must understand that higher returns inevitably mean higher risk.”

Scottish Life International communications manager Wilma Littlejohn says: “We have been aware of the FSA&#39s concerns about these products for a while now. As a result, we believe the issues outlined by the FSA have been addressed in our product literature.”

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