UK market misses the magic touch

British providers could do with some tips from their European counterparts.

Despite the widely-held belief in London’s supremacy held by the City’s practitioners, the UK is far from being the most advanced fund management market in Europe. In Italy, UniCredito, one of the country’s largest banks, has structured a E1.4bn ‘Mix’ structured bond for customers of the country’s post office. The once dusty, backward depository of brown paper wrapped parcels and provider of television licences has emerged as Italy’s prime provider of financial services. UK consumers would still laugh at the idea of their own post office as a distributor of complex investment products. In Spain, a constant proportion portfolio insurance (CPPI) bond, known as ‘Deposito Supersatisfaccion’, allowing clients an advanced dynamic re-allocation of assets every time the market moves, is sold through the retail banking network of the Santander Group. But a window for capital protected or structured products has also opened up in the UK, where the high net worth market has been ravaged by the scandal of the virtual collapse of split capital investment trusts. Millions have already been lost in a vehicle that was considered ‘safety-first’. Poor performance of with profits and endowment policies has also left clients and distributors looking for a guaranteed alternative. Investment banks such as Lehman Brothers are already trying to win advisers over to their own version of CPPI. Yet some veterans of the UK market, such as Scottish Life International (SLI), now owned by Royal London, are taking their home-grown product into Europe. The Dortmund Trade Fair recently provided the launch-pad for Libertas, a capital protected investment designed by SLI, and marketed through three key distributors in Germany – Andrew Peat Group, AVD and ProClient. But German intermediaries have more than just product structure on their minds. A looming EU directive on the regulation of insurance intermediaries could well be extended to supervise Germany’s army of unpoliced fund brokers.