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Lowes open letter slams Peter Hargreaves’ structured stance

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Lowes Financial Management managing director Ian Lowes has hit out at Hargreaves Lansdown founder and executive director Peter Hargreaves for blaming structured products for the significant hike in the FSCS levy.

In an open letter to Hargreaves, Lowes says while he supports Hargreaves’ claim that the levy hike is unfair, he is wrong to cite structured products as the main offender.

Last month,The Financial Services Compensation Scheme announced a £93m interim levy on advisers. The levy includes FSCS compensation costs of £86m, mainly to compensate Lifemark investors, and management expenses of £7m. In addition investment fund managers are to be billed £233m – meaning the total FSCS interim levy is £326m.

Hargreaves Lansdown chief executive Ian Gorham called for  a review of the FSCS after it was hit with a £3m levy bill earlier this month.

Lowes says: “The collapse of Keydata was not caused by structured products, rather it was precipitated by the secure income bonds and secure income plans, US life settlement schemes, which had no underlying defined measurement and so were not structured products.”

Hargreaves has attacked structured products on a number of occasions in the press. Lowes says advisers are required to have a broad range of knowledge across a number of subjects and to understand the whole of market, including structured products.

Lowes says: “May I suggest that you spend a little time perusing www.StructuredProductReview.com, or one of the other resources covering the sector, where you will find not only the answers to your doubts and fears but a vast array of solutions to complement your clients’ portfolios of investment needs.

“The returns achieved in 2010 by the type of structured / defined investment utilised by many IFAs prove that those who discounted the sector out of hand may have served their clients better by taking a more open minded approach.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Seems like self serving semantics from Ian Lowe.

  2. Whoever is right in the argument it can’t be argued that all structured products are bad for investors. In my 15 years of advising on structured products I have only 5 cases where a client has made a loss and only 3 of them where the counterparty failed to meet its obligations. The main culprits if there are any is off the page adverts without advice. Its time to unite against what is an unfair levey I agree, but arguing amoungst ourselves is not the answer.

  3. Peter Hargreaves calling something an apple when it is actually an orange is not a question of semantics but more a distinct lack of basic fruit knowledge!!

  4. Who is paying for the FSCS television advert on prime time channels? Part of the increased Levy perhaps. Oh dear our budget has increased, i wonder what we can spend on !!!

  5. Keydata was a regulatory failure. The losses now being picked up by the FSCS were compounded by an unfit regulator failing to act back in 2007 when it first issued its infamous ‘enforcement notice’ on Keydata.

    As we all know, this unfit regulator is totally unaccountable, even to Parliament.

  6. Having read a recent Hargreaves Lansdown article about Structured Products (by their Head of Financial Planning), I would urge HL to take Ian up on the offer of access to structuredproductreview.com – or better still, some training.

  7. No renewal commission on the two asset classes that Peter does not like (property and SP). Is this a coincidence?!

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