On 14 August 2009, the FSA provided an update to the Financial Ombudsman Service (FOS) on issues relating to Lehmans-backed structured products which it is considering under the “Wider Implications” process.

The Wider Implications process is intended to provide a transparent means of bridging potential regulatory gaps or overlaps between the FSA, FOS and Office of Fair Trading on ‘significant issues’, including those that may give risk to widespread consumer detriment.

When Lehman Brothers collapsed in September 2008, it transpired that a considerable number of UK investors had taken out plans where either a full or partial guarantee had been provided by Lehman’s.

The FSA’s response was to conduct a review of the marketing literature for Lehmans-backed structured products. This is now complete and the FSA is in the process of evaluating the findings. A further priority, which it aims to conclude as quickly as possible, is to prepare for an assessment of the quality of advice for these products. Thirdly, it is conducting an analysis of the wider market for structured products in the UK which will feed into the overall review.

Whilst the FSA has completed several elements of its work, it has asked the FOS to continue to defer its consideration of complaints by a further three months to allow the FSA to consider the remaining aspects.

View Wider Implications referral: Lehmans-backed structured products - update, 14 August 2009