Structured Thoughts: News for the financial services community -- Volume 2, Issue 15

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Structured Products Guidance from the FSA We have previously discussed the “sea change” in the way retail financial products will be regulated by the FSA (and, later on, by its successor, the Financial Conduct Authority) in the UK, as highlighted in the FSA’s Discussion Paper published in January 2011 and the “next steps” proposed in its Feedback Statement published in June 2011. The FSA’s focus on greater intervention at an earlier stage of the structured product life-cycle is again in evidence in a recent guidance consultation published in November 2011 (the “Consultation”).

The Consultation sets out the FSA’s proposed guidance to product providers on their internal systems and controls relating to the development, design, marketing and distribution of structured products. In particular, it focuses on ensuring that such systems are adequate, in the context of what it sees as the increasing popularity and complexity of structured products, to minimise the risk of poorly-designed products and mis-selling, or mis-buying, further down the production/distribution chain. The focus of the Consultation is on the ways in which structured investment products (both principal protected and non-principal protected) and structured deposits (together, “structured products”) are designed and marketed to meet the needs of target customers, as well as the post-sales responsibilities of firms (although the FSA states that its focus, in this particular case, is on product providers rather than distributors).

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