Morgan Stanley’s FTSE Gilt Backed Growth Plan 9 and 43 others with similar contract terms, along with Investec’s FTSE 100 Enhanced Kick-Out Plan 21 are affected by the ruling.
The FSA raised two issues regarding the Morgan Stanley products, the first being that customers would not know when the firm could cancel a contract in cases of breach, and that they would not have the opportunity to rectify the breach. The second was that it wasn’t clear under which circumstances the firm could amend the contract.
The Investec product was also deemed to be opaque about the circumstances under which a customer’s contract could be cancelled, and a second term was flagged for not fully explaining the process for cancellations outside the 14-day cooling off period or the capital loss the customer would incur for withdrawing from the plan outside of this period.
Both firms have agreed to change the terms, with new contracts being sent out to customers in due course.
