FSA Investigates Lehman Structured Product Sales

The FSA and Financial Ombudsman Service said in a press release yeasterday they have jointly concluded that Lehman Brothers’ insolvency raises issues in the UK structured products market.

The release said: “As a result, while the Ombudsman has been investigating a number of individual complaints, the FSA has been actively looking at the wider issues raised in this market.”

The FSA and Ombudsman have agreed that the regulatory options available to the FSA would be one way of reducing consumer detriment, as well as potentially being able to deal with the concerns of more consumers than those who have complained to the Ombudsman.

Therefore, they have agreed that the FSA will now consider issues relating to Lehman-backed structured products under the “wider implications” process, in order to allow the FSA to explore all options to achieve the best outcome for consumers.

Many in the industry concede clients have not been well served by structured product providers, particularly in the retail market where fees are notoriously high. “As much as 80% of the structured products world doesn’t deliver good value to investors,” says Chris Taylor, chief executive of Blue Sky Asset Management, speaking to Wealth Bulletin last year.

FINRA arbitration is a dispute resolution process offered by the Financial Industry Regulatory Authority (FINRA) to resolve conflicts between investors, brokerage firms, and individual brokers. Unlike traditional court litigation, arbitration is typically faster and less formal. In this process, an impartial arbitrator or a panel of arbitrators listens to both parties’ arguments and evidence before making a binding decision. This method is often chosen for its efficiency and lower costs, making it an attractive option for investors seeking resolution without the complexities of a court trial. The arbitration process is governed by specific rules and procedures, ensuring a fair and equitable hearing. While the decision is final and generally cannot be appealed, parties can still settle the dispute before the arbitration concludes. FINRA arbitration serves as a crucial mechanism in maintaining market integrity and protecting investors’ rights.