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Claims that structured products are completely safe are "completely misleading", according to consumer champion Which? Money.

Individuals looking to invest in products that claim to offer a 'capital guarantee' or '100 per cent protection' could be hoodwinked, as they can often be riskier than they appear, Which? Money said.

The independent consumer body warned structured products were not always as safe as they seemed and could be confusing, complex and costly.

Despite claiming to guarantee investors' money, some of these products provide contradictory information, such as warning investors about the risks if the product provider or counterparty providing the capital goes bust, according to James Daley, editor at Which? Money.

"When stock markets are falling and banks are going bust, the offer of a 'guarantee' on your savings or investments can be very appealing, but guaranteed investments are not always what they appear to be," he said.

"Although not all protected investments are bad news, phrases such as 'capital guarantee' and '100 per cent protection' are bandied around far too often, and don't stand up to scrutiny. We'd advise people to beware of products that make such a bold claim - unless they're backed by the government."

Most structured products have a fixed-end date, at which point the investment returns will be calculated, Mr Daley said. This means investors do not have the option of waiting for markets to recover if the investment has not performed as they hoped.

Further, he said, providers take charges into account when setting the terms of the product, which can make it difficult for people to know what they are paying.

And unlike other investments, many of the structured products are not covered by the Financial Services Compensation Scheme, he concluded.

The Investment Management Association (IMA) agreed more needed to be done to align the regulations on disclosures and sales practices of structured products with authorised investment funds.

Richard Saunders, chief executive of the IMA, said the consumer playing field would be levelled by such a move.

"Consumers should benefit from the same disclosure about product features, costs and risk that investors in funds receive," he said. "This is particularly important where these products compete directly with funds."

But the comments follow a survey of IFAs by Virgin Money that found nearly one third – 27 per cent – of advisers would choose structured products for cautious investors.

Andy Clark, managing director of UK wholesale at HSBC Global Asset Management, said: "Our view is that anything that gets people investing outside of cash is a good thing."