Conduct Problems in Advertising Structured Products in Switzerland

In connection with my recent series of posts highlighting ads by Credit Suisse (Ad 1, Ad 2), Vontobel (Ad 3), Deutsche Bank, Notenstein (Raiffeisen) (Ad 4) pushing structured products such as barrier reverse convertibles, bonus certificates, it was interesting to read this comment from the UK’s Financial Conduct Authority:

Clive Adamson, director of supervision at the regulator, said: “It is particularly important in this sector that advertisements for financial products enable customers to make informed decisions. We think that more can be done to ensure that advertisements are fair, clear and not misleading.” (Guardian.co.uk, May 16th 2014)

This clearly is a problem in the ads I’ve been writing about. The term sheets are often linked to as a by-the-way. I doubt every investor buying the products is reading them. Yet it would be critical.

Also another point is a problem with the ads: the fees and costs of these complex products.

details of fees are either missing or “buried in the terms and conditions”

In todays’ low interest rate environment these products costing maybe 100-200bp (1-2%) are performance destroyers par excellence.

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