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FSA to examine structured product distributors

The FSA says it plans to review distribution practices for structured products next year, after it found weaknesses in the way providers are designing and approving the products.

The regulator published new guidance for structured products today, which requires providers to identify their target market and design products that meet those customers’ needs, pre-test new products to ensure they deliver fair customer outcomes and ensure a robust new product approval process. Firms will also be expected to monitor the progress of a product through its life cycle.

The FSA says it will look at distributors of structured products next.

The report says: “We did not assess sales processes or quality or suitability of individual sales, nor did we include distributors. The FSA will be doing further work on these issues in 2012.”

Last month, FSA chairman Lord Turner warned the low interest rate environment is making consumers more vulnerable to the lure of complex structured products.

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  1. Excellent progress by the FSA – but continued pressure on those banks onshore & offshore that issued such “100% principal protected” structured products and subsequently failed to meet this headline commitment must be maintained. Historic redress is essential alongside actions to deliver future risk reduction

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