Speaking at a Money Marketing round table on structured products, Taylor said imitation instead of innovation led to the precipice bond debacle in 2001 and was the cause of recent problems over credit risk.
He said: “For those that innovate, the headline rate is not your single objective and you will balance risk and return. If you are second off the blocks, you will need to surpass the original provider and will have to compete on headline rate unless you have a strong franchise and can talk about investment integrity. That is not currently being seen in the UK.”
Barclays Wealth director Colin Dickie argued that the trend of headline-grabbing rates is overstated and has largely disappeared from the marketplace.
He said: “I do not think it is as prevalent as it once was and the product mix is quite diverse. The basic product is commoditised so everybody knows the price.
“There is a bit of gazumping because if you do not have the highest rate you will not get the market share but I think that has largely gone now.”