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Which? warns on structured products

Consumer group Which? says that structured products are confusing and complex and says they provide contradictory information in their product literature.

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.”


FTSE cautious at open

The FTSE opened higher at 4,238 today but lacked conviction from investors ahead of this afternoon’s meeting with members of the UK monetary policy committee who are due to testify on the inflation report.


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There is one comment at the moment, we would love to hear your opinion too.

  1. guarantee Structure products
    I completely agree and I was under impression that structure products are safe and if bank goes in Administation/liquidation I would be cover by FSCS upto £48000.All the brokers advice me of this. After Leyman brother I calll one of the broker above counter-party and his comment was it is in brocure. I WOULD NOT INVESTED IF I WAS CLEAR ABOUT THE COUNTERPARTY RISK. I think FSA need to look at Structure Products overrall and state what is cover under FSCS.

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