Incapital blasts IMA and Hargreaves over SP criticism

Incapital Europe MD Christopher Taylor has slammed Hargreaves Lansdown and the IMA for what he claims are commercially-motivated attacks on structured products – labelling their views a “duet of diatribe”.

Taylor, writing for StructurdProductReview.com, said Hargreaves Lansdown's outspoken comments on structured products are commercially motivated. He also claimed the IMA - which recently published a scathing study into the alternative investments - is simply representing the interests of providers it is paid to promote.

"It is hard to know where to start in countering this latest duet of diatribe against structure products, but as with most criticism of structured products what immediately jumps out is the points made by both Peter (Hargreaves) and the IMA are sweeping generalisations that are simplistic, misguided, outdated and basically wrong," he said.

Tearing into Hargreaves Lansdown following its "repeated outbursts" against structured products over the last two to three years, he said the firm's "soap box stance" appears to be commercially motivated.

"The bottom line, despite the criticisms of hidden or high charges in structured products, is that the charges built into structured products by most leading providers are generally lower than is typically the case with mutual funds. It is therefore difficult to give Hargreaves Lansdown both initial commission, that they can rebate to clients, and to provide trail commission that they can retain," added Taylor. "Simply put, this is their basic business model - and it is not, therefore, complicated to see the ‘rub' for Hargreaves Lansdown."

Meanwhile, Taylor labelled the IMA's study and comparison of a single type of structured product - the NS&I GEBs - against mutual fund trackers as "absurd" and no basis on which to castigate all structured products.

"Simply put, the IMA has no expertise or efficacy (or legitimate purpose) in commenting upon the structured products industry," he added. "The motivation for the IMA's interest in the structured products industry is clearly not end investor's best interests : it is, of course, the best interests of the providers that they are funded by and whose commercial interests they are paid to promote."

Concluding, he said investors "fundamentally" want solutions which carry less risk to capital and more predictable returns.

"Risk and return profiles have arguably never been harder to predict, manage and control, and this is precisely where intelligent use of intelligent structuring can add irrefutable value, alongside best of breed actively managed mutual funds and passive funds."