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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.”  



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

  1. 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.

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