Finance industry’s principles keep the watchdogs at bay

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  • Yes, it does look like a political move. As you report, the principles are non-binding. It is hard to imagine that the industry will really be motivated to clean itself up, but the FSA has also been slow to act. The FSA investigated the marketing of structured products in 2004 after the precipice/SCARP mis-selling scandal, and they investigated in 2009 after thousands of UK savers lost their money with Lehman-backed structured products. The FSA reported widespread mis-selling by advisory firms and by plan managers involved in the Lehman losses. Now FSA is thinking of investigating again. These products are often marketed to older investors who cannot afford to take the risk with their money. The average age of the Missold Investments action group (For the Lehman plan holders) is well over 60.

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  • There continues to be a misperception that Lehman-issued structured products should be treated differently than Lehman common stock or bonds, notes and other Lehman securities. All of the above had the credit risk of the issuer, and those holding Lehman stock and bonds is a vast multiple of those holding Lehman structured products. So why is there an over-emphasis on the minority who invested in Lehman SPs, and radio silence on the millions of investors who lost 100% of their investments in stocks and bonds of Lehman?

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  • @Structured products professional
    The issue is not about the fact that Lehman bonds failed. It is about the "widespread mis-selling" of those bonds by UK FSA-authorised firms (to quote the FSA October 2009).
    Anybody who feels they have been mis-sold, no matter what the product, has the right to complain and seek redress. Just as importantly, FSA has a duty to regulate.

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