Editor's letter

Earlier this month, I received a letter via the old-fashioned snail mail postal service inviting me to invest in a structured product. The UK's National Savings & Investments (NS&I) told me that as an investor with them already - albeit thanks to my relatives buying me a couple of premium bonds when I was born, as seems to be tradition in the UK - I already know that "NS&I are the only investments that offer 100% security." This may be presumptuous for most of the investing public, but at least NS&I had the sense to ask me, and all the other targeted investors, whether I also knew "that this security also extends to the potential returns of the stock market?"

I have to admit that NS&I's marketing literature for its Guaranteed Equity Bond Issue 11 is easy to comprehend and provides some good examples of how my proposed investment could play out given rises in the FTSE 100 index. My only gripe would be that nowhere on the covering letter did NS&I think to tell me that the minimum investment for the five-year term is £1,000 - I only found that out half way down the key features document.

The trick with marketing structured products is to make sure that nobody can have a gripe. This month we report how one investor, Harish Pawani, a director of Dubai-based investment company Peekay Intermark Limited, successfully sued ANZ Bank for misrepresenting one of its emerging markets structured product investments. Pawani contended that ANZ had verbally explained a product that worked very differently to the one he ultimately signed up for. Despite the fact Pawani had signed up for a product that worked as it said it would, losing almost $250,000 along the way, he won damages.

Signing the terms and conditions for the product meant nothing, the presiding judge ruled, instead ANZ was in the wrong for its allegedly lax verbal representation. In the end ANZ appealed and won, meaning that contractual law still has a place in the British judicial system.

Both the ANZ v Peekay case and the NS&I direct marketing letter demonstrate to me just how difficult it must be for distributors and structurers to get the marketing message right. They also demonstrate to me how questions of marketing will exist for some time to come.

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