NOTHING TO DO WITH THE FSA?

Advisers’ fundamental lack of understanding identified by the FSA as a key factor behind inappropriate sales of Lehman-backed products to consumers. Nothing to do with incompetent regulators failing to regulate structured products, the banks, and a myriad of other areas?

Posted by: Simon Mansell

Own up!

"There was a clear failure to understand counterparty risk" Those who did warn of counterparty risk said to their clients - "Lehmnans - Standard and Poors A+ rated bank (same as RBS). Don't believe it! This bank is replete with toxic assets. Where are we now? November 2007. Look, this bank will go under in a few months time and the capitalist world system will be on the brink of collapse. It will be the biggest bankruptcy in world history. I've decided not to advise on this product. Keep your money in cash where there is no risk to capital. Put it in RBS!"

Posted by: Ken Durkin

It might be nice

If the FSA were to admit that THEY did not understand counterparty risk as evidenced by their February 2004 Factsheet entitled "Capital at Risk Products" which made no mention of counterparty risk under the list of "main risks" and this was a ccustomer facing document for non advised sales. It's easy to be wise afetr the event....

Posted by: Phil Castle

adviser knowledge gap re structured product failings

You couldn't make it up. The FSA take no responsibility whatsoever but the IFA is expected to know that Lehman Brothers would shortly collapse because the US government decided it couldn't back it (despite backing AIG, Freddie and Fanny etc) I take full responsibility - hang me out to dry

Posted by: bill wells

Firm knew all about Lehmans

The FSA "highlighted good practice at a firm which analysed a counterparty’s credit default spreads, credit outlook and financial reporting. This enabled the firm to move out of Lehman-backed products before the bank collapsed". What a pity this adviser didn't tell the rest of the world what was going to happen next!

Posted by: Ken Durkin

Missing the point

All those in the regulatory world will look to protect themselves from the flack that will undoubtedly come their way. If they(FSA) had concerns regarding Structured products and the Counterparty risk, surely they should have had them in the public domain. After all if a provider is duly authorised should we not be able to rely on the fact that the FSA would have due diligence in place, or are they only interested in looking good after the event. I wonder if Lloyds TSB had gone to the wall, would i have to personally compensate all of the clients i have invested in Scottish WIdows, that would truly finish me off. Not to be clever, i only have one client exposed to this type of risk, and it was part of an overall investment strategy, for that client balancing off other investments so may be this time we wil be lucky. One more thing surely now that the providers of these prducts have been placed in liquidation the public should be able to rely on the FSCS. A loss will not be known until appropriate payments have been made, or the LIquidators have cleared up the mess, so how on earth do you compensate. After all i am sure that IFA's make a hefty contribution to that scheme dont we, should we be able to rely on that also, or am i missing the point.

Posted by: Andy

Understanding

The FSA should recognise their role in the lack of understanding of the full risks involved in Structred Products. As should the providers, i.e. the investment banks. It is however incorrect to regard these investments as high risk, like any investment they need to be fully understood. For that to happen the providers need to recognise their role in the education of the end user. Too little time selling, not enough time spent ensuring that clients know what they are investing in and thus ensuring there are clients today and tomorrow.

Posted by: Rory