Regulations 'will be made tougher' for structured products

The European Commission has pledged to take tighter control of investment products, in order to better protect private investors.

An update from Brussels yesterday revealed plans to strengthen regulations on the way in which structured investment products are sold at the retail level.

The Commission suggested that the reforms would serve to close up inconsistencies in the current system between the way that funds and structured products are regulated - and as such will not represent a wide-ranging overhaul for investment product providers such as private banks.

Types of structured products include trackers and so-called ’capital protection’ funds.

In Brussels, market and services commissioner Charlie McCreevy commented: ’The financial crisis has underlined once again how important it is that retail investors are able to make informed investment decisions. It is vital that investors receive information they can trust and understand about the investments they make, and that those selling investments always treat investors fairly and focus on their needs.’

The Commission received high praise from the Investment Management Association (IMA) yesterday, following the announcement of the decision.

Commenting, Richard Saunders, chief executive of IMA, said: ’I am delighted to see today’s announcement from the Commission that the consumer protection playing field between the lightly regulated structured products on the one hand, and funds is to be levelled.’

He added: ’The proposal will help ensure that consumers benefit from the same disclosure about product features, costs and risks that investors in funds receive. This is particularly important where these products compete directly with funds.’ADNFCR-2318-ID-19147982-ADNFCR