View more on these topics

Which? ranks structured products in “useless products list”

Which? Money has featured structured products in its top 10 useless financial products list.

Structured products feature alongside mobile phone insurance and payment protection insurance in the report as products people could be wasting thousands of pounds each year.

The report says: “Cost: Can be significant – around 6,000 people with a structured product (a type of investment package backed by banks or their affiliates) were left with nothing when Lehman Brothers collapsed in 2008. Which? view: “Can be confusing, complex and costly – put your money into an Isa.” 

Which? recently warned that some comparison websites could be encouraging investors to buy potentially risky structured products without taking financial advice.

It said and have comparison tables featuring structured products which use labels such as “top deals” and “best buys” which could encourage consumers to invest without fully understanding the risks.

A UK Structured Products Association spokesman says: “The Association is genuinely concerned that any investment product should be compared to a tax wrapper as this is confusing. Isas are a tax wrapper, so you don’t invest ‘in’ an Isa, what you are invested in is ‘wrapped-up’ in an ISA. We’re rather disappointed that Which? would confuse products and wrappers in this way.

“Providers are not in the business of making investors unhappy and in the majority of cases structured products achieve the returns that investors expect from the investment and contribute effectively to performance of a diversified portfolio.”


News and expert analysis straight to your inbox

Sign up


There are 12 comments at the moment, we would love to hear your opinion too.

  1. Since when are Which allowed to give advice. Also as correctly pointed out you can invest in a Structured Product via an ISA – would be nice if these ‘experts’ got their facts right.

  2. Anyone who wants to see just how useless these structured products are (at least for 6000 Lehman investors) can visit – the self help action group for people who have lost their savings through these products

  3. Any product sold, if the financial back up is not sound can be useless. Once again “Which” are sticking their oar in when they are not qualified. Will they take responsibilty for anything that goes wrong after they have”advised”customers what to do. Pink Pigs will fly again. If they want to give advice they should pay PI premium, FSA fees, FSCS and FOS fees and be put under scrutiny and pressure that advisers are put under.

  4. Chris Taylor, CEO Blue Sky Asset Management 4th June 2010 at 2:26 pm

    Unbridled and sweeping comment from publications, that is potentially ill-informed, is as much of a disservice to investors as bad providers and bad products. The key word is ‘differentiation’ : not all providers or products are the same (as, indeed, is the case with any industry, including the press).

    Any publication looking for ‘good news’, that might be useful to readers, as opposed to always focusing on the downsides, can readily find plenty of good example of innovative, successful structuring that has been proven to have worked well for investors, during incredibly challenging market conditions, ie low interest rates have meant/still mean savers and investors need options and solutions, but high equity market and other asset class volatility mean many options haven’t been very palatable/attractive.

    At Blue Sky, we work with progressive wealth managers and investment advisers for the clear benefit of their clients, with an approach and a capability that isn’t transactional or product driven, including bespoke solutions. This, in our opinion, is the progressive and ‘intelligent’ way to approach using structured investments, including fee based options that even Which would struggle to be anything other than impressed by. But, it seems good news doesn’t always make good press.

  5. Kelvin Lillywhite 4th June 2010 at 2:35 pm

    Alternatively, any one of the hundreds of clients that I’ve placed in these types of investments over the years and have had protected growth as well as good market participation may choose to defend rather than getting some stupid claims chasing to make up unfounded allegations half the time. It may come as a surprise to you londoner but the problem is not the products at all, some have a very good place, it’s how they are sold and whether the risks are fairly explained. It makes me sick that everyone’s first thought is to complain and they are encouraged by the likes of that website. Investors can lose money, it does not mean there has always been bad advice. If the client is aware of the risks and understands them then they choose to take that risk for the additional rewards. As for which, their comment about “invest in an ISA” not a structured product just shows how little they know.

  6. Julian Stevens 4th June 2010 at 2:38 pm

    Read Ian Lowes’ informed and informative article on structured products, as published a few months back in Money Marketing.

    The article in Which? sounds to me like a pretty shoddy and ill-informed piece of journalism. It’s a bit like saying I had a pension plan that performed poorly, ergo all pension plans are rubbish.

  7. Re londoner @ 1:08

    You say “Anyone who wants to see just how useless these structured products are (at least for 6000 Lehman investors)”

    But what about the tens of thousands of investors who have done very well out of structured products.

    To criticise a whole asset class due to the actions of a bad apple is quite simply daft!

  8. Which ?

    Not regulated nor authorised but perhaps they are right in pointing these out these products are “not without risk” and that they need to be purchased carefully (if at all) and only as a part of diversified portfolio.

    Not speculate by pushing all a clients life savings in one product in excess of the compensation limits.No names no pack drill. N&P IFA(sic)

  9. Richard Smith 4th June 2010 at 4:20 pm

    Hooray at least someone with a little authority ( or at least PR clout) has stated exactly what any IFA should have known. Structured Products have always been skewed on the favour of the producer and or seller, like With Profits and a few other products.

    Long live the adviser/bancassurer doing the job properly, the rest will shrivel and die just before the RDR and so they should.

    That of course will leave a lot more business for the rest of us.

    Richard Smith

  10. Dathan Steele 4th June 2010 at 6:30 pm

    I don’t see SP’s as ‘bad products’ per se, its just that they are generally sold [and I do mean SOLD not advised] by salesmen and advisers who actually don’t understand them, or the potential risks involved. Kelvin has it right here, if an adviser and their client know and understand the risks, then that is fine. If however a SP is sold with little understanding by an adviser to a client who has little knowledge then its a disaster waiting to happen…..

    My understanding is that the majority of SPs are actually sold by bankassure salesmen who do not have a clue what they are selling 🙁

  11. The problem can be both with the products, and with the way they are sold.

    There may well have be many examples of satisfied clients, but how many of them really understood what they had invested in?
    1) Single point of potential failure – the counterparty
    2) No FSCS cover should the counterparty fail
    3) No dividends from their index (FTSE 4% per annum currently)
    4) Loss of flexibility and control once the investment is made
    5) Down-side and up-side constraints which are unnecessary for many long-term investors
    6) Juicy commissions for the intermediaries.

    The collapse of Lehman really brought these products in to focus. The FSA found widespread mis-selling amongst product providers and amongst IFAs.

    ‘Useless’ may be too wide a generalisation, and these products may have a role to play in some portfolios, but let’s hope that the industry and consumers really learn from what has happened and treat these products with care.

  12. Norman English 7th June 2010 at 10:17 am

    Which unfortunatley do have the public ear. In essance much of what they state is a blanket response to a few bad apples. In essance however much of what they say is correct. It is necessary to select these product with the assistance of a good IFA who will explain the risks and select a product which meets the clients needs. I advise clients regually on structured products and I personally would like these only to be sold face to face and stop all off the page sales which leads to confusion. Like all investment product, they do have a place in a clients diversified portfolio.

Leave a comment


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