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Following the collapse of Lehman Brothers, the Financial Services Authority (FSA) and Financial Ombudsman Service (Ombudsman) have been looking at the potential detriment this has caused for investors in the UK structured products market.
In May, the FSA and Ombudsman agreed that the issues relating to Lehmans-backed structured products should be considered under the "Wider Implications" process, in order to allow the FSA to explore all options to achieve the best outcome for consumers.
The FSA has now gained enough information from its review to enable it to move forward and believes it is now appropriate to lift the hold on individual adjudications of complaints on an immediate basis.
The FSA will report back on the outcomes of its review in more detail in October but confirms that it will be taking action against firms as a result of the findings of the review.
Dan Waters, retail policy director at the FSA, said:
“This is a hugely complex area and during our review we have looked at promotional literature, clarity of information, quality of advice, sales systems and controls, involving plan managers, providers and advisers.
“There is still much for us to do and we will be outlining some of the findings of the review next month in more detail, but I can confirm that we have found serious issues and will be taking action against firms.
“In light of the progress we have made, we believe our regulatory action can now progress alongside the Ombudsman adjudicating on individual complaints without prejudicing either, so individual cases referred to the Ombudsman can now proceed.”
Background
- The Wider Implications process is intended to provide a transparent means of bridging potential regulatory gaps or overlaps between the FSA, Ombudsman and Office of Fair Trading on 'significant issues', including those that may give rise to widespread consumer detriment.
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
