The Australian arms of Credit Suisse Investments Services and UBS AG have dropped the use of the terms ‘contingent capital protection’ and ‘conditional protection’, respectively, from their promotional material for ‘capital at risk’ structured products.
The materials were available for download from both companies’ websites, and were also provided to consumers via financial advisers.
Boutique structured products investment manager Instreet Investment has also made changes to a product it promoted, which is issued by UBS.
The Australian Securities and Investments Commission (ASIC) released a report expressing concern about the misuse of the terms ‘capital protection’ and ‘capital guaranteed’ in reference to retail structured products in May.
The Commonwealth Bank and HSBC voluntarily amended their advertising for certain retail structured products in July, after ASIC raised concerns.
“Words like ‘protection’ imply a level of safety that is inconsistent with the nature of these structured products,” said ASIC deputy chairman Peter Kell.
“Investors in these products have limited or no exposure to the positive performance of shares when prices rise, but downside risk in a falling market, often concentrated to the product’s worst performing reference share,” he said.
“In this context, any product labels or descriptions that imply investors’ money in such products is ‘protected’ or ‘safe’ are highly problematic,” said Mr Kell.
