In the latest issue of Which? Money, the group found that some structured products promised to guarantee investors’ money but at the same time it warned investors of the risks if the product provider or counter-party went bust.
Which? says this is contradictory and found a wide variation in how well the risks were explained.
The consumer group says that some providers disclose fees but others do not and many of these products are not covered by the Financial Services Compensation Scheme.
Which? Money editor James Daley says: “When stock markets are falling and banks are going bust, the offer of a ‘guarantee’ on your savings or investments can be very appealing, but guaranteed investments are not always what they appear to be.
“Although not all protected investments are bad news, phrases such as ‘capital guarantee’ and ‘100 per cent protection’ are bandied around far too often, and don’t stand up to scrutiny. We’d advise people to beware of products which make such a bold claim – unless they’re backed by the Government.”