Structured product providers amend terms after FSA concerns

Investec and Morgan Stanley have agreed to change terms for some of their structured products after the Financial Services Authority (FSA) raised concerns they could be unfair.

Investec Bank has changed the terms for its Investec FTSE 100 Enhanced Kick-Out Plan 21, and Morgan Stanley & Co International has changed the terms for its Morgan Stanley FTSE Gilt Backed Growth Plan 9 and other investment plans with similar contract terms.

The FSA said for both providers: ‘In our view, one term gave [the provider] a broad discretion to cancel a customer’s contract if the customer breached the contract in any way.

‘We were therefore concerned that customers would not know when [the provider] could cancel the contract or have the opportunity to rectify a breach.’

The FSA also said it believed a second term in Investec’s contract did not clearly explain the cancellation process outside the 14-day cooling off period or how much the customer would lose if they withdrew from the plan outside of the period.

Another term in the Morgan Stanley contract gave the provider discretion to make any changes to the contract, and the FSA said the circumstances of how a change could be made were not made clear to consumers.

Both providers have agreed to amend the original terms.

The FSA said customers do not need to do anything and customers who received contracts containing the old terms would be treated as though the new wording applies to them.