View more on these topics

Structured products body hits back at Wheatley’s “spread bets on steroids” claim

<!–
<!–
<!–
<!–
<!–

–>
–>
–>
–>
–>

Martin Wheatley 2 2013 700x450
Financial Conduct Authority chief executive Martin Wheatley

<!–
<!–
<!–

–>
–>
–>

The UK Structured Products Association has hit back at “sensationalist” comments made by Financial Conduct Authority chief executive Martin Wheatley which compared many structured products to “spread bets on steroids”.

Speaking at the London School of Economics last week, Wheatley argued it is harder to defend the concept of buyer beware, where complex financial products are involved.

He said: “A perfect example has been some of the more exotic structured products offered by firms. Products that have often been mind-bogglingly complicated financial gambles, almost like spread bets on steroids.”

Wheatley explained consumers act instinctively when seeing high returns advertised by a trusted brand.

He said: “Could we use behavioural economics to weed out products that are too complex for their target market, and may even be specifically designed to benefit from consumer mistakes?

“Many structured products fall in this category: products with too many moving parts, products that are almost impossible to take a rational decision on. So you revert to the instinctive: what is the headline rate; do I like the look of the salesman; is there a pot of gold on the poster?”

UK Structured Products Association chairman Jamie Smith says Wheatley “paints a very lurid and sensationalist picture” of structured products.

He says Wheatley’s tenure at the Hong Kong financial regulator, where investors were missold complex structured products backed by Lehman brothers, may be skewing his perception of the UK market.

Smith says: “I hope he is not assuming that is happening in the UK. I am a little concerned that he is blurring the issues.”

Succession Group director Alister Mellor, who advises on structured products, says: ”The majority of these products are not overly complicated, it may just be Wheatley is rattling a few cages to ensure advisers are thinking carefully when recommending them.”  

Recommended

Sue-Whitbread-MM-blog.jpg

Sue Whitbread: Reviewing your business is its own reward

Does your business need a spring clean? With day to day client work proving more than enough to keep most advisers fully occupied, taking time out of a busy schedule to undertake a thorough review of the processes and procedures that lie behind the business is often not given the attention it deserves. However, it […]

PPI redress bill hits £9.3bn

The total redress bill so far for missold payment protection insurance has hit £9.3bn, figures from the Financial Conduct Authority reveal. FCA figures published today show firms paid out £409m in February to compensate customers who were missold PPI, following a payout of £439.3m in January. The level of redress is drawn from 24 firms […]

38

Axa closes UK bancassurance arm; 450 jobs at risk

Axa is set to close its bancassurance division following a strategic review of the business, Money Marketing can reveal. Axa currently has two UK banking partners – the Co-operative Banking Group and Clydesdale and Yorkshire Banks. The decision to close the bancassurance arm will result in the loss of approximately 450 Axa UK roles and […]

21

Yorkshire and Clydesdale Banks scrap advice service

Yorkshire and Clydesdale Banks are scrapping their branch-based advice service after Axa closed its UK bancassurance arm. Money Marketing revealed yesterday that Axa’s bancassurance arm has closed following a strategic review of the business, resulting in the loss of approximately 450 jobs. Until yesterday, Axa partnered with Yorkshire and Clydesdale Banks and the Co-op on investment advice, with Axa […]

Globe - thumbnail

Considerations for overseas workers in Germany

With Germany’s strong economic growth leading the eurozone’s recovery, many UK businesses are keen to be part of the success story: recent data shows that there are currently more than 280,000* employees working for a UK-controlled company in the country.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. StructuredProductReview.com is a service created by IFAs for IFAs to give a better perspective of the structured product market. It’s entirely free service for financial services professionals – there are many structured products available, and to suggest that they are all complex is some way wide of the mark.

  2. Ill informed No 2 18th April 2013 at 7:47 pm

    Yet another ill informed clown at the top of this quango

  3. MIssold Investor 19th April 2013 at 7:41 am

    The Hong Kong plans failed for the same reason as Lehman-backed plans sold elsewhere, notably in Germany (with the largest volumes), Taiwan, USA, Belgium, Spain, Singapore, Switzerland, Italy, Indonesia and the UK. The counterparty was Lehman, and the bank went bust.

    The HK authorities investigated and reported widespread mis-selling (as did the authorities in other countries). Complexity was part of the issue, but it was down to misrepresentation and a failure to match products to savers’ investment profiles. More than 60% of the HK notes were sold to elderly and poorly educated people often as a ‘low risk alternative to deposits’. It’s a similar pattern in other countries.

    Mr. Wheatley perhaps gained useful insight during his time in Hong Kong.

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com