The FSA has warned of the "potentially catastrophic nature" of structured product counterparty risk to investors.
Published this week, the warning features in FSA guidance designed to help IFAs understand its structured investment products suitability assessment template.
The 22 frequently asked questions (FAQs) include sections on customer exposure to structured products and counterparty diversification.
"Where structured investment products are concerned, we stress the importance of the impact of counterparty risk, its potentially catastrophic nature and the associated relevance of a customer's capacity for loss," says the FSA.
Following publication of the document, the FSA says it expects IFAs to make the necessary changes to their advice, which it will check at follow-up assessments.
Click here for the structured investment products suitability assessment template - FAQs
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