Europe maintains a chronic pessimism which is not new in financial history. The crypto industry has already paid the price with sometimes disproportionate regulations. Today, it is structured products, these investments sold as protected return solutions, which find themselves in the crosshairs of the French authorities. The AMF and the ACPR have just published a study which should make savers think about the trust they place in financial institutions.
In brief
- The AMF and the ACPR have denounced entry fees of up to 13.16% of the amount invested by clients.
- Structured products show a performance lower than that of the stock markets over the period 2022-2024.
- Only 14% of products offer total and unconditional capital protection at the maturity of the investment.
- Regulators are now demanding supervisory actions and increased transparency on fees and distribution channels.
Opaque fees and sluggish performance: the harsh findings of regulators
The AMF and the ACPR have scrutinized the structured products sold to individuals in France. THE verdict is clear and should concern all stock market investors.
Entry fees can reach 13.16% of the amount invested, with an average of 5.83%. The average performance is 2.4 points lower than that of the markets over the period 2022-2024, a bullish period.
Regulators have identified situations of non-compliance at all levels of the distribution chain. From issuers to final distributors, customer information is systematically lacking.
These investments, presented as protected return solutions, do not keep their promises. The customer pays a lot for security that doesn't really exist.
The mirage of capital protection: a promise that is expensive on the stock market
Banks and insurers sell capital protection as a strong argument. This protection is most often conditional and only applies at maturity.
Only 14% of products offer total and unconditional protection. 57% integrate conditional protection with barrier. And 26% offer no capital protection. The customer pays dearly for security which does not always exist in practice.
In a bullish stock market, it loses 2.4 points of return compared to a direct investment. In a bear market, he may lose all or part of his capital.
The promise of capital protection is often a mirage that masks a much less rosy reality. The crypto-sphere is familiar with this kind of gap between promises and reality.
Opacity of fees and commercial abuses: towards firmer regulation of finance
Structured products suffer from chronic opacity which harms market transparency. Fees are integrated into the structure of the product, deducted upon subscription, and remain unchanged regardless of the holding period. The client is unaware of the distribution of revenue between issuers, insurers and distributors. Only a third of the products had a sufficiently precise target market.
The promoters' thesis: these products protect capital. The antithesis of regulators: they are opaque, expensive and underperforming. The summary is necessary: firmer regulation is necessary. The authorities now require bilateral supervisory actions.
Transparency and education of savers must become absolute priorities. The crypto sector is well aware of these issues, which is under increasing regulatory pressure in Europe.
Figures to remember about structured products
- Average entry fee of 5.83% of the amount invested;
- 13.16% maximum costs noted in the study;
- 2.4 performance points below the markets;
- Only 14% unconditional total protection;
- 26% of products without any capital protection.
Structured products illustrate the excesses of a finance that favors intermediaries rather than savers. The AMF and the ACPR are right to strengthen their control. The parallel with crypto is striking: complex products sold to individuals who do not control the risks. Europe, which now has only 7 MiCA compliant companies, continues to tighten its regulatory requirements.
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