Providers and distributors: responsibilities regarding retail structured products

Abstract

Purpose

The purpose of this paper is to provide an overview of recent guidance from the FSA and industry, and recent case law regarding product providers and distributors

Design/methodology/approach

Explains current status of the guidance; provides overview of the guidance and its two component parts directed at “product providers” and “distributors”; discusses international dimensions; explains compliance implications; describes parallel trade association principles published in a July 2007 paper entitled Retail Structured Products: Principles for Managing the Provider‐Distributor Relationship; and summarizes three recent English judicial decisions relevant to the responsibilities and duties of providers and distributors.

Findings

The responsibilities of providers and distributors regarding retail structured products are being defined by an interaction of regulatory, common law, and soft law provisions. Just as the FSA's exercise of its regulatory powers is increasingly based less on detailed rules and more on general principles, so the judges' decision making is based less on doctrinal detail and more on a pragmatic assessment of the relevant facts as a whole.

Practical implications

Regarding retail products, the best approach for providers and distributors is to focus not only on detailed rules and contractual provisions but also on the factual detail of the arrangements, and whether the outcomes are fair to investors and meet their reasonable expectations as created by the firm.

Originality/value

Expert analysis provided by leading lawyers specialized in financial institutions.

Citation

Rouch, D., Benjamin, J., Raffan, M., Kalderon, M. and Orton, S. (2008), "Providers and distributors: responsibilities regarding retail structured products", Journal of Investment Compliance, Vol. 9 No. 1, pp. 18-23. https://doi.org/10.1108/15285810810859270