The UK Structured Products Association (UKSPA) has introduced a series of product codes to help retail investors and independent financial advisers (IFAs) identify the different product structures available in the UK retail market.
The new product classification is broken down into four main sectors: protected, non-protected, growth and income. These codes are intended as a reference guide to help advisers and investors understand what the different types of product are and their key features.
“This is one of a number of projects the UKSPA had for 2014 and is part of a wider programme of work to promote transparency and education within the UK structured products market,” Zak de Mariveles, chairman of the UKSPA, told SRP. “The idea behind this development is to provide uniformity in the product nomenclature across the UK and indeed Europe, having taken Eusipa’s product classification as the starting point to define the different payoff types available in the market, making changes and additions where required to make it appropriate to the UK retail market.”
According to the UKSPA, structured products can be a useful addition to investors’ portfolios and there are a range of different products available to UK retail investors to help them achieve this but currently no standard naming convention. “Often, the same type of product will be marketed under a different name by different providers,” it said.
According to de Mariveles, the new system will allow investors to create a clear standardised classification and a transparent system to compare the different structured investment solutions available within each sector.
“Members are committed to bringing transparency to the market and enhancing the understanding of structured products within the IFA and investor community, as increased awareness will help advisers and investors to make better informed decisions,” he said. “The inclusion of the product codes in our members’ product brochures is not mandatory but it is expected that providers will adopt it and include this information in their product literature.”
The UKSPA also said each product code includes an overview of the typical investor profile and a graphical representation of the payout profile, which will be included on the association’s members’ product brochures.
“This is part of a series of initiatives the UKSPA is working on,” said de Mariveles. “Future developments for example include providing regular historical performance data on the various product types available within the UK. In addition, we are also looking at providing a UKSPA risk rating to allow professional advisers to compare products not just by product profile but also specific risk profiles.”
De Mariveles also said that this initiative is a work in progress but that the association is in the later stages of development.
“We expect to be able to provide this function to the adviser community in the first quarter of 2015,” he said.
The full product classification system can be accessed via the UKSPA website.
See also:
Italian trade body responds to Consob’s moratorium proposal
Marcel Tak: Education is more important than prohibition
SSPA sets mandatory fees disclosure guidelines
SPIS: The industry has not received full credit for its efforts and progressEusipa: Consob initiative distorts EU level playing field