Investments 

‘Ring-fence to protect customers’: Lowes

‘Ring-fence to protect customers’: Lowes

All structured product providers should ring-fence client administration and custody fees and subscribe to a kitemark to help boost consumer confidence in the sector, Ian Lowes has claimed.

The founder of StructuredProductReview.com, and managing director of Newcastle-based Lowes Financial Management, said that lessons have been learned from the way in which some historic problems were handled by regulators and administrators.

He said: “One positive impact is that many providers now insist on a portion of the fees due to a third-party administrator/custodian being held in a segregated client account or escrow arrangement until the eventual maturity of the investment.”

This is designed to ensure that if the administrator goes out of business there are funds available to remunerate a replacement service provider.

Mr Lowes added: “I see no reason why such a policy should not be adopted by all providers in the interests of protecting clients and helping to continue to build confidence in the sector. Perhaps it is time the sector introduced something akin to a kitemark, indicating that a particular provider complies with a code of conduct covering such best practices.”