IFSRA to review tracker bonds

The Irish Financial Services Regulatory Authority has begun a public consultation to review the marketing and sale of tracker bonds and similar investments.

This follows a number of consumer queries and complaints to the IFSRA about the complexity of some of these products.

The Financial Services Regulator is considering developing a code of conduct in relation to the advertising and marketing of trackers.

Among the topics that confuse people the most are costs and charges, disclosure, documents issued to clients and projections and past performance.

Consumer Director, Mary O'Dea said: "Sales material should therefore be clear about the risk involved in the product and the certificate that the consumer receives when investing in a tracker should give full information.

"Some trackers offer capital guarantees, however, this may not cover the entire capital invested because of costs and charges associated with the product and may only be available when the tracker reaches maturity.

"Because tracker products track stock market indices or baskets of stocks, the bonus will only reflect how the stocks or basket has performed. These issues are not always immediately obvious to the investor," O'Dea added.

Trackers are an investment that promise, at the end of a chosen term, the return of a specified percentage of the original capital and the possibility of an additional return based on the performance of a basket of stocks.

They have been sold on the Irish market for the last 12 years.