Ian Lowes, managing director at Lowes Financial Management, knows more than most other IFAs about the uncertainty facing investors in Lehman-backed structured products. He is one.
"Lehman Brothers was the fourth biggest investment bank in the US, the largest player on the London Stock Exchange and rated by the leading credit rating agencies as being in a strong position to meet its financial obligations.
"It has been suggested 17 March 2008 was a pivotal date from which point it was apparent the bank was in trouble, but the credit rating agencies did not downgrade their assessments to indicate it should be avoided and, as such, IFAs and investors had no real indication of what was to come.
"The collapse could therefore not have been foreseen by the typical IFA, or anyone else for that matter, and it was described by former Federal Reserve chief Alan Greenspan as "probably a once in a century event".
"With this in mind, the potential insolvency of Lehmans as the counterparty behind the structured products was highly unlikely and certainly could not be described as anything other than an extremely low risk indeed.
"That said, some risk did exist, as it does with all such investments, and this is a risk accepted by investors unless it was hidden or disguised in any way by the provider or the adviser.
"It is this latter point that is the key; in our opinion, no matter how low the risk was, if it was not clearly stated in the product literature or the adviser's suitability letter, investors may well have a right of recourse, particularly where such documentation was produced and recommendations to invest were made after 17 March last year.
"Ultimately, I believe that, whilst it is regrettable private investors are suffering, the net result is likely to prove positive for both the structured product and advice sectors generally because lessons have been learned, albeit, as so often is the case, the hard way."
"I had more than £27m of client money invested in structured products in 2008, the year Lehman defaulted, with £500,000 in plans backed by the US investment bank.
"I have £8,000 of my own cash invested in one of Meteor Asset Management's Prima Growth plans, which was backed by Lehmans.
"But my view is advisers who don't use structured products are making a mistake and are actually delivering a mis-service to their clients. Maturities this month produced gains topping 60% in some plans.
"That said, advisers must assess each product and only recommend those deemed suitable for their client. That's our job.
"It would have been understandable to say defaults in these huge companies are highly unlikely, but not to say there was no chance of default. I think that is what the FSA has probably detected. But it will more likely be plan managers, not IF
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