Market sources have separately told Money Marketing that Lehman Brothers’ underwritten products at risk total in the region of £500m.
Speaking to Money Marketing at the Conservative conference this week, Hoban said investors in Lehman-backed structured products need to be given some clarity over whether they have any protection from the Financial Services Compensation Scheme.
He said: “It is not clear, given what has happened to Lehman, what value that guarantee has any more. There is a risk here that investors will join the ranks of creditors. If their portfolio underperforms, they will end up registering a claim.
“The Government needs to take a lead in helping to clar-ify where these products stand and any recourse that consumers might have to the FSCS.”
Hoban said the challenge for advisers will be to demonstrate that they took full account of the risks associated with these products.