Financial Regulatory Forum

UK regulator to pursue firms over structured products

By Reuters Staff
September 11, 2009

LONDON, Sept 11 (Reuters) – Britain’s financial watchdog said on Friday it would be taking action against firms as the result of a review into the structured products sector.

The Financial Services Authority instigated the review following the collapse of Lehman Brothers last year to determine how the U.S. bank’s demise damaged investors in Britain.

“I can confirm that we have found serious issues and will be taking action against firms,” said Dan Waters, retail policy director at the FSA. The regulator declined to comment further on the type of action or firms involved.

The FSA said it has now had enough information to allow the Financial Ombudsman Service, which settles disputes between consumers and financial services firms, to proceed with adjudications on individual complaints without either action prejudicing the other.

Structured products are investment vehicles linked to an index or an asset for a set time and which use derivatives to provide a return based on the performance of the asset.

Just over 5,600 British consumers invested 107 million pounds ($179 million) in Lehman-backed structured products between November 2007 and September 2008, according to the FSA.

The regulator, which has the power to fine individuals and companies, said it would give more detail on the outcomes of its review in October. The review was extended in May to analyse the wider market for structured products.

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