The Financial Services Authority is clamping down on structured products, saying words such as ‘guaranteed’, ‘protected’ and ‘secure’ are misleading and calling for product literature to be made clearer.

In its quarterly consultation, the City watchdog said that after reviewing the growing structured products market it had found some firms promoted the products ‘without any clear and adequate justification for the descriptions used’.

The FSA said: ‘We believe that this could be implicitly misleading and could lead to consumers misunderstanding what is actually offered to them.’

Structured products are offered by providers such as Citi, Credit Suisse, Morgan Stanley and Santander, and are often sold in high-street banks and building societies. They are often touted as savings products but are actually linked to how a stock market performs over a set period and an investor's capital is not always guaranteed.

The FSA is now proposing to introduce some guidance so firms can fully understand the FSA’s view of how the ‘fair, clear and not misleading’ rule applies.

‘This is to ensure that firms know that, when using terms such as ‘guaranteed’, ‘protected’ or ‘secure’, they should provide information, in financial promotions or other product literature, to make it clear what these terms mean for the consumer. This guidance will facilitate more effective supervision of this market. If we proceed with our proposals, firms will have six months to comply with this guidance,’ the FSA said.

A spokesman from the UK Structured Products Association says it 'wholeheartedly supports' the FSA's objectives and will engage with the FSA during the consultation.

Meanwhile in answer to criticism over the transparency of structured products a comparison website has said it will publish data on the maturity values of structured products.

Details of maturities will appear on CompareStructuredProducts.com for both the top and bottom-performing products as well as products that have matured within the past two months.

Ian Lowes, managing director of Lowes Financial Management, which runs the website, says: ‘‘We believe structured products are often undervalued and by publishing data across a range of products on a regular basis, we aim to raise the profile of these investments and show the complementary role they can play alongside other investments in a balanced and diversified portfolio.’

Richard Saunders, chief executive of the Investment Management Association and a vocal critic of structured products, welcomes the move calling it ‘an important step towards better transparency for consumers’.

To learn more about structured products, don’t miss the June issue of Money Observer, out in shops now, which contains an in-depth analysis of the market.