Fos to review advisers' Lehman-backed assets

In May, the regulator and Fos agreed that issues relating to Lehmans-backed structured products should be considered under the Wider Implications process, in place to bridge potential regulatory gaps or overlaps between the FSA, Fos and the Office of Fair Trading, on what it termed as "significant issues".

At this point the Fos was told by the FSA to halt to its investigations while this work took place.

Paul Bicknell, spokesman for Fos, said: "On 11 September the FSA wrote to the ombudsman to say that it has now completed enough of its work to conclude that regulatory action could take place alongside case-by-case adjudications by the Fos.

"The Fos will now be proceeding towards issuing decisions in the individual cases that have been referred to it."

The FSA has also announced that it will be taking enforcement action against certain firms with regard to the mis-selling of Lehman Brothers' structured products. It is due to report back on the outcomes of its review in more detail in October.

Dan Waters, retail policy director for the FSA said: "This is a hugely complex area and during our review we have looked at promotional literature, clarity of information, quality of advice, sales systems and controls, involving plan managers, providers and advisers.

"There is still much for us to do and we will be outlining some of the findings of the review next month in more detail, but I can confirm that we have found serious issues and will be taking action against firms."

Mr Waters said: "In light of the progress we have made, our regulatory action can now progress alongside the ombudsman adjudicating on individual complaints without prejudicing either, so individual cases referred to the Fos can now proceed."

In response to the question of why the FSA was now pressing ahead, despite its request for three months of extra time in August, Adam Richards-Gray, said: "Work has progressed and we are now in a position where we can confirm action may be taken. This is an important development."

Mr Richards-Gray said that there was no fixed timetable for any enforcement action to take place.

Keith Churchouse of Surrey-based IFA Churchouse Financial Planning, said: "It will take years for the process to unwind. I am not sure Lehmans itself knew what it was investing in and it will take a long time to be resolved."