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FSA vows to probe blocks on counterparty identity

The FSA has pledged to investigate the “purported regulatory blockages” stopping investors and advisers identifying the underlying counterparty of certain structured products.

At an annual structured retail products conference last week, retail policy director Dan Waters said the FSA had been considering the quality of marketing material and risk disclosures issued following Lehman’s failure and was working to ensure the prominent indication of relevant risk in promotions.

He said: “We are keen to work through some of the purported regulatory blockages that stop investors or their advisers knowing which institution or institutions have issued the debt that makes up the capital protected element of a particular product.”

NDFA says it is unable to disclose the counterparty name due to EU prospectus directive constraints until after a plan’s strike date but can tell advisers who contact them.

Arc does not disclose counterparties in its literature but will give the information to IFAs on request. Meteor has disclosed counterparty information in its last two Prima plans but the counterparties of previous issues have only been available to IFAs verbally.

Waters expressed concern about the range of structures in the UK market and said the regulator was considering whe-ther structured deposits should be sold on a non-advised basis.

Lowes Financial Management managing director Ian Lowes says: “This is going to move us to where we should be. If advisers are recommending structured products without the requisite knowledge, they are not doing themselves, the industry or their clients any service. A lot of the criticism is about bank sales and this is where the close eye needs to be but in Europe that is where most of the sales are.”


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