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A few weeks ago, the Daily Telegraph published a little article I had written suggesting that the disclosures around structured products are not up to the same standard as those for mutual funds. What a lot has happened since.

First, the article generated a gratifyingly shrill response from the structured products industry. Press releases were issued denouncing the Investment Management Association and all its works. People queued up to defend structured products as models of transparency and probity. Clearly I had touched a nerve.

Then came Lehmans. I do not know what the impact of the collapse is going to be on holders of structured investment products - I hope it will be minimal and that investors will not be harmed - but the episode has highlighted that sometimes there are risks involved in investment that some investors may not fully appreciate. In this case, it is counterparty risk, something that always lurks in the background when products involve derivatives and other contracts.

But let us go back to the beginning. When people invest money, they ought to be looking for two things: some reassurance that they will not lose significantly; and a decent return. There is a tension between the two. The laws of economics tell us that there is an inverse relationship between them - the greater the reward, the less the likelihood of complete security, and vice versa. And different investors have different risk appetites, depending on their financial circumstances or maybe just their DNA.

But it means that a product which offers both safety and a decent return is going to be compelling for many savers. And arguably several high street banks are offering just that with some deposits yielding up to 6 per cent or 7 per cent. But it is perhaps possible to do better still by taking on a modest amount of risk, whether through a balanced fund or a diversified portfolio.

And that is where structured products come in. In investment terms they can help diversify market exposure across assets with uncorrelated returns. A well-designed product can offer a degree of certainty of return, allied to risks that the investor understands and is comfortable with. If investors are prepared to sacrifice liquidity and understand the nature of the counterparty risk, all well and good. Such products are part of the bread-and-butter of wealth managers, and nobody would gainsay their role with sophisticated advisers and investors.

But that is not the end of the story. Structured products are not confined to the clients of wealth mangers in London and Geneva. They are increasingly finding their way to the man in the street, whether through IFAs or, most worryingly, through direct offers by retail banks or organisations, such as National Savings & Investment. And they are competing for the same funds as other investment products like mutual funds or life bonds.

Now competition is good. But competition needs to take place on a fair basis or, as the cliche has it, on a level playing field. This is in the interests of the different participants in the market. But it is also in the interest of consumers.

So how level is the playing field here? Much of it is laid out in a succession of European directives. It is important to distinguish between two different types of product. The first is the structured security. In regulatory terms, it is governed by MiFID, the acronym, sounding like a cross between a soft toy and a John Wyndham novel, for the Markets in Financial Instruments Directive. The directive concerns itself with the distribution of securities and investments, not their construction. It applies to the distribution of both structured securities and mutual funds. The rules governing life products, under the Insurance Mediation Directive, are similar and under review. So far, so good.

It is when you get to the products themselves that differences emerge. Funds are subject to rigorous product regulation, governing issues such as pricing, cost, portfolio composition, investment and counterparty limits, independent oversight and custody. And everything an investor needs to know about the product - and a good deal more, sadly - is laid out in a prescribed format under the FSA product disclosure regime. A similar disclosure regime applies to life products.

But the same detailed regime does not apply to structured securities. So, there is not the same level of transparency as there is with a fund or life product. For instance, your ultimate counterparty and investment exposure under a structured security is often far from clear. And how much of your investment is going to the manager is often not disclosed - unlike a fund, where the annual management charge is all that the manager receives - let alone what charges were taken internally within the issuer to create the product.

These issues do matter, and need to be addressed in some way, but overall these products are part of the bio-diversity of the financial services industry. They have their part to play, although there may be a need to apply some of the disciplines that exist elsewhere in the market. It is less clear that one can be so sanguine about the second type of product - the structured deposit.

The classic structured deposit is the guaranteed equity bond. This will promise to return your money in full after a set period, for example five years, as well as enabling you to benefit from any rise in the stock market. The seductive pitch is that you can get a stock market-related return while ensuring you cannot lose money if the market goes down.

Now many people - journalist, IFAs and others - have argued that these are not attractive investments, since they guarantee that you will either do worse than a conventional fund or do worse than a deposit account. I will not dwell on that other than to remark that our researches have shown that the NS&I version of the product consistently underperforms by an amount about the same as the equity risk premium. In other words, over time you do not get a stock market return at all, but a risk-free return. Which, after all, is what you should expect from a product guaranteeing your money back.

But the real shocker is that these products and their distribution are not subject to detailed conduct of business regulation by the FSA. Instead they are covered by the voluntary Banking Code, which was never drawn up to deal with investment products. Compared with the FSA's Conduct of Business rules, the Banking Code is a high level document, with no detailed prescription of what product features to disclose, and none of the safeguards around distribution of investment products such as "know your customer" or commission disclosure.

As a result, many promotions soft pedal key issues such as just how much it is likely to cost the customer to forgo dividend distributions. And the voluntary code does not have the weight of FSA's enforcement capabilities behind it; there are no fines for non-compliance.

None of this mattered when deposits were clearly distinguishable from investments. That is not longer so clear-cut. It is high time for a review of whether the rules across the board have kept up with the development of the market.

Richard Saunders is chief executive of the Investment Management Association