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FSA moves to assist structured product investors

FSA moves to assist structured product investors

Category: Investments

Updated: 27/10/2009
First Published: 27/10/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The way has been paved for investors who were mis-sold Lehman-backed structured products to claim compensation.

The Financial Services Authority (FSA) has announced tough and wide-ranging action to help investors who received unsuitable advice or misleading promotional material when they bought a Lehman-backed structured product, as well as measures to address issues in the wider structured products market.

The move follows a review of the market by the regulator which found significant advice failings on Lehman-backed products in most of the financial advice firms sampled, as well as serious deficiencies in the marketing literature provided by a number of the plan managers selling the products.

As a consequence, the FSA has decided to take direct action to address the detriment caused for investors with Lehman-backed products and robust steps to ensure all future structured products investors are treated fairly.

In the last two weeks, NDF Administration, Defined Returns Limited and Arc Capital and Income have all gone into administration, with investors who purchased Lehman-backed structured products through these firms possibly being entitled to compensation from the Financial Services Compensation Scheme.

The regulator has confirmed it will now be writing to the largest sellers of other structured products, asking them to examine how they have sold these products in the past against FSA standards. If necessary, they have been told to review past sales and provide investor redress where appropriate.

"The focus of our review has been to achieve the best possible outcome for as many people as possible that invested in structured products backed by Lehman Brothers," said Dan Waters, the FSA's director of conduct risk. "This is a hugely complex area given the number of different firms involved, and there is no one-size-fits-all solution for these investors.

"However, given the failings we have come across in the marketing and selling of these products, today we are setting out a package of robust measures to help those who have lost money. We are also taking decisive action to address issues in the wider structured products market to ensure that all future investors will be treated fairly – and we will not hesitate in taking action if firms do not take sufficient steps to respond to our concerns."

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