Product producers and distributors' workshop

The last month has seen two guidance consultation papers from the FSA on how to build payment protection and structured products, amid concern at the regulator that recent problems have not led to sufficient improvements. Adam Samuel deconstructs the product design and distribution process.

Adam Samuel BA LLM DipPFS MCISI FCIArb Certs CII (MP&ER) Barrister and Attorney may be contacted at AdamSamuel@aol.com. His book, ‘Complaints and Compensation: a Guide to the Financial Services Market’, is available from his website, www.adamsamuel.com.

It always seemed strange that UK financial services regulators were not until recently interested in the end result, the financial product itself. The Financial Services Act 1986 only governed the marketing and sale of retail products, not their manufacture or even their administration. Yet some of the worst scandals faced by the regulator have at least had a product label attached to them, such as home income plan, mortgage endowment, rebate-only policy (technically the appropriate personal pension!), split capital trusts, structured products and now payment protection insurance (PPI). Thankfully, the Financial Services and Markets Act 2000 was drafted in a much broader way and enables the regulator to supervise product manufacture.