Selling products that sound better than they actually are isn’t exactly new. Ever since they started selling the sizzle rather than the sausage there was a chance we’d get home with a packet of bangers and find the whole thing a bit of a disappointment.

Mis Sold Financial Products

However, when it comes to financial products we don’t need sizzle, we need to know what we’re getting into, and according to Which? seven major building societies are selling a product with a sizzle that’s downright misleading.

Structured product

The product in the firing line is a Protected Capital Account, which is run by Credit Suisse and is being sold by the major building societies.

It’s what’s known as a structured product. It doesn’t invest in the sorts of things we understand. It invests in complex financial instruments which mean it can track the performance of an index of shares, and yet still promise that if the market falls you get your money back.

The amount of money it makes depends on the performance of the market, and is advertised as being anything up to 60% over six years.

Financial advisers generally dislike these kinds of products intensely as they are opaque, the guarantee depends on a whole host of things, and they never deliver quite what people are expecting


But Which? particularly dislikes this product as it says in the last 25 years it would not have achieved the maximum advertised returns.

It also includes an early exit fee that, Which? believes, could unfairly penalise investors who need to get their money back before the maturity period. Even death of the holder does not automatically enable a free exit from the product.

Which? chief executive, Peter Vicary-Smith says: ‘It’s outrageous that this savings product has been peddled by building societies when it appears almost certain to fall so far short of the claims they made for it. We want this and similar products to be withdrawn immediately. Sellers of such products should stop using such appallingly misleading marketing claims.’

It begs the question of whether we should be investing in structured products like this at all. A huge number of banks and building societies offer them. They look simple, but behind the scenes they are horribly complex. One thing we learned from the financial crisis was never to invest in anything we don’t understand, and this seems to fall into this category.

If it seems to good to be true, the chances are that you’re buying the sizzle.

Mis Sold Financial products.


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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.