The chairman of the UK Structured Products Association has defended the suitability of 'complex' products for the retail investor, after Lord Adair Turner criticised their complexity and value for money.

In a speech at Mansion House yesterday, Lord Turner, chairman of the Financial Services Authority (FSA) said the history of retail financial services had 'not been a happy one' and said consumers were 'vulnerable'.

He added, 'The core problem is the complexity of many financial products and the inequality of knowledge between salesman and customer. 

'The true price of an investment product is often not [easy to understand]. So the potential to sell products which carry more cost or risk than customers appreciate is ever-present; today when low interest rates mean low returns for truly safe investments, making consumers highly vulnerable to complex structured products which appear to offer the dream combination of higher return without higher risk.

'In financial services the potential for the customer to be ripped off is simply far greater than in other sectors – and the consequences potentially more significant,' he added.

Jamie Smith, chairman of the UK Structured Products Association said his organisation fully supported Lord Turner's view that the miss-selling of investment products had to stop.

He continued, 'The association, however, believes it is incorrect to classify "complex" products as intrinsically unsuitable for retail investors. Many so-called "complex structured products" are actually designed specifically to meet the needs of retail investors.

'Furthermore, it cannot be assumed that complexity of product equates to a higher risk. This is a misconception held throughout the industry and a theme that the association will address in coming months.

'We are concerned that the FSA may be overstating the risks associated with structured products. The Financial Ombudsmen Service (FOS) complaints data highlights the small percentage of structured products complaints derived from structured products sales.

'In the first quarter of 2011, the FOS received only 34 complaints regarding structured capital at risk products out of a total of 81,301 complaints it handled', he said.

The Government's Retail Distribution Review (RDR) promises to change the way financial advice is provided. Starting in 2013, RDR aims to increase transparency and independence.