UK regulator clamps down on structured product selling

The UK Financial Services Authority (FSA) is set to finalise tough new guidelines for marketing retail structured products this month, as it moves to strengthen oversight after 2003's 'precipice' bond controversy, which saw Lloyds TSB fined almost £2 million for mis-selling.

The FSA says its research shows financial promotions for products offering income, capital growth or capital security can be complex and difficult to understand. It is therefore proposing that firms selling ‘structured capital-at-risk products’ (scarps) – an investment that provides a specified level of income or growth over a fixed investment period but do not provide a guarantee on the return of initial capital – be required to provide consumers with risk warnings and send their customers

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