Old Mutual International, part of Old Mutual Wealth, is taking legal action against Leonteq Securities AG and related parties. The legal action relates to the making of false statements by Leonteq as to levels of commission paid to advisers on Leonteq structured products.

'Had the true level of commission been disclosed the products would not have passed Old Mutual International's criteria and no investments would have been made,' stated Old Mutual International. 'As a result of the investments made in these products, significant financial losses have been suffered. Old Mutual International is taking this action in order to seek redress in respect of those losses.'

"We are taking a firm stand against the behaviour which has led to such devastating consequences," said Peter Kenny (pictured), managing director, Old Mutual International. "As with all legal cases, there is a long road ahead, but we will do all that we can to bring to account those responsible."

The wealth manager said that 'not all structured products are bad, and they can be useful for clients who want a degree of capital protection whilst also providing exposure to investment markets or a fixed return'.

However, the firm also stated that many structured products are often very complex in design. 'Regrettably some investors and advisers will not always possess the depth of knowledge required to fully understand the risks and rewards associated with investing in such structured products,' it said, adding that over the years, 'Old Mutual International has taken action to tighten its criteria, introduced a maximum fee level, and in some cases banned certain types of structured products from certain institutions'.

Separate to the legal action against Leonteq, Old Mutual International is encouraging all market participants to help rid the industry of inappropriate structured products which 'are having a damaging impact on investor confidence and outcomes'.

'Investors deserve fair pricing, simplicity and transparency - it is the responsibility of all market participants to deliver against these requirements for the international financial services industry to have a sustainable future with good customer outcomes provided by trusted brands,' said Kenny. 'I would encourage all industry participants to work together to eradicate poor practices once and for all.'

A spokesperson at Zurich-based Leonteq Securities said it has taken note but "cannot comment on the matter". "However, it is important to note that Leonteq is disclosing the applicable fees for its issued products on the termsheet or other relevant legally binding product documentation," said the spokesperson.

Leonteq, formerly EFG Financial Products Holdings AG, is a major issuer of structured products. In addition to Zurich, it has offices in London, Geneva, Monaco, Guernsey, Frankfurt, Paris, Amsterdam, Singapore and Hong Kong.

Leonteq was the fourth most active provider in Switzerland in 2017 with over 1,900 products marketed and the second in market share with CHF4.1bn in sales. The Swiss firm also appears as the bond provider on more than 2,000 products sold in Germany/Austria, Czech Republic, France, Italy, Sweden and Switzerland; and as a derivatives manufacturer in over 800 products across Europe.

The firm returned to profitability in 2017 after a challenging 2016 which saw its financial performance curbed by operational issues with key platform partners, 'which exacerbated the top line weakness during the company's strategic shift away from own issuances.'

Old Mutual International has distributed over 170 products across markets such as the UK (149 products), South Africa (five), the US (four) as well as 13 products aimed at international investors which includes the Committed to the Future (CTF) range developed in close cooperation with BNP Paribas.

An Old Mutual spokesperson declined to provide further details on  specific products 'given it is a legal case'.

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