The City watchdog also said structured product providers should identify their target audience and then design products with them in mind rather than just thinking about the firm’s bottom line.
Products should also be monitored through to the end of its life cycle, the FSA suggested.
The regulator said it had been concerned about the rising popularity of structured products and their increased sales and in some cases product complexity.
It feared this, along with a "lack or robustness in firms’ product development and marketing processes" could increase the risk of mis-selling, or mis-buying by consumers.
To address the risks the FSA assessed seven major structured product providers between November 2010 and May 2011 and specifically looked at how the firms were designing their products, identifying their target markets and how they handled post-sales responsibilities.
For the full FSA report, click here.
