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The ongoing feud between the IMA and providers of structured products shows little sign of abating.

Last week, the European Commission called for a new “horizontal legislative approach” to help align disclosure and sales processes for all “packaged retail investment products”, including investment funds, insurance-based investments and, perhaps unsurprisingly, structured products.

In its paper, the Commission claims inconsistencies in existing standards have been “detrimental to investors”, leading to “competitive distortions” in the retail market. And, as such, it argues existing product-information requirements, as well as rules on sales, need to be made “more coherent” for retail investors.

Just what exactly the Commission plans to do to improve existing information, particularly with respect to structured products, remains unclear. It has already begun work on a number of “detailed legislative proposals”, and says it will provide orientation on its progress by the end of this year.

But however short on detail the Commission’s communiqué may have been, it was at least a clear signal of intent - and that is to be warmly welcomed, as far as the IMA is concerned. Indeed, the IMA has long lobbied the FSA to “level the playing field” between structured-product providers and funds. In recent months, it has even warned investors not to take structured products “at face value”, openly criticising offerings for being too complex, opaque and, in some cases, even misleading.

Richard Saunders, chief executive at the IMA, says he is delighted with the Commission’s “most welcome” paper, which he says will ensure consumers benefit from the “same disclosure about product features, costs and risks that investors in funds receive”.

“We haven’t got any details, but what we do have is a promise that we will see some proposals by the end of the year,” he says. “My contention is that structured products are subject to much less rigorous disclosure requirements than mutual funds. Under Mifid, structured products are well regulated in some respects, but where they fall down is around product disclosure. A structured product is under no obligation to tell you what’s being done with your money.

“I’ve seen some marketing material that says, ‘Your money will be invested in a basket of bonds.’ What they mean is, they’re going to be investing in some derivative-based structure, which is not the same thing at all. Why not just tell people what’s being done with their money?”

But structured-product providers have largely been indifferent to the Commission’s announcement, if somewhat bemused by the IMA’s spirited response.

Ronan Gelling, marketing manager at NDFA, a structured-product specialist, says his company has been surprised by the IMA’s stance, if only because it will “further highlight the void” between structured products and funds in terms of fees. He also points out the growing popularity of structured products, that the “vast majority of funds are going nowhere” in the current market and that outflows show “no sign of abating”.

Colin Dickie, a director at Barclays Wealth - a structured-product provider - says the Commission's announcement “was to be expected”. In terms of disclosure, he adds, “there isn’t much else structured products can do”.

“It won’t be particularly demanding for the structured-product industry to respond to whatever the commission wants to do because they are already – in a post-Lehmans environment – operating at a high level of integrity,” he says. “There’s already a level playing field as things stand.”

Mr Dickie laments the fact “few investments have been as misunderstood as structured products”, despite unprecedented support from investors and advisers, and he flatly rejects the notion they are opaque.

“Structures can specify what investment returns will be for different market movements over the term,” he adds. “Payoffs are taken into account when structures are produced, so investors also have clarity over their returns and receive confirmation about how much commission is paid. Where’s the opacity?”

He also denies the assertion providers generally fail to disclose counterparty risks.

“No doubt, this has been a problem in the past, but counterparty disclosure - or rather the lack of it - is no longer an issue,” he says. “Most providers now identify the counterparty. Indeed, there is an argument to say adviser pressure has successfully pre-empted the FSA on this matter.”

While Mr Dickie may have concerns about how structured products are currently perceived, there is at least one thing that does not worry him. “Whatever the Commission decides, it will be business as usual,” he says. “There really isn’t much more to add.”

Jim Robinson is news editor at Investment Adviser