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Misselling fears on protected and guaranteed funds

Investors are unaware of the complexity of structured products such as protected or guaranteed investments and how their returns are calculated, warns IFA firm Deep Blue Financial.

The company says it has carried out comprehensive analysis of the structured investment market and has identified what it calls “smoke and mirrors” products which are deliberately complex and seduce investors with headline rates.

Deep Blue says it is writing to Government ministers and regulators warning them of the potential misselling scandals which could result from these types of products.

It believes this warning is timely and needed because of the popularity of protected and guaranteed investments in a volatile stockmarket and in an economy with falling savings rates.

Deep Blue says investors&#39 money may be linked to stockmarket index returns which are the last indices that should be associated with low risk.

The company warns that promised returns are often massaged over certain time periods to make them look higher and product literature, marketing and distributors&#39 positioning of the products can be misleading.

Associate director Kerry Nelson says: “The use of words such as protection or guarantees without sufficient warnings and context is irresponsible. It is time to ensure that low risk means low risk and expose the smoke and mirror brigade.”

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