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 uSwitch.com and Moneyfacts.co.uk 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.”