By Charlotte Beugge

Sales of structured products could be limited or they could be banned outright, according to an interview in the Financial Times.

Martin Wheatley, chief executive designate of the Financial Conduct Authority (which is due to replace part of the function of the Financial Service Authority next year) says that products that could be harmful should be limited or banned.

The paper adds that although specific products aren't named, when Wheatley worked in Hong Kong as the financial regulator he "obtain[ed] settlements for investors who had lost money in structured products".

Last year, about £9 billion of structured products were sold. They are often marketed as an alternative to deposit accounts. They are not savings accounts but instead of the money being left on deposit investors are given a return linked to a stock market index while their original capital is protected.

But as the protection of the original capital is provided by using financial products provided by other concerns, there can be counterparty risk. This happened when Lehman Brothers failed in 2008 as it had provided some of the instruments producing the capital protection.

Given that structured products appear to offer attractive returns with little risk, it's understandable how savers, fed up with three years of low savings rates, could be tempted.

However, these products are inflexible as you can seldom get your money out early and while you may have capital protection, how much you'll get of any index growth may be limited too.