The ‘UKSPA Risk Ratings’ are designed to enable advisers to compare different structured products more easily and help them select those that match their clients’ risk profiles more closely.
The ratings are ‘two-dimensional’ in that they reflect both the market risk and credit risk of a product, the UKSPA said.
The market risk rating is calculated on a one to seven scale based on the volatility of the product. The credit risk rating is based on the credit rating of the issuer or deposit taker of the product and ranges from A to G.
The ratings have been designed for use by financial advisers only and are available via UKSPA members’ websites. More information is also available at www.ukspassociation.co.uk.
“Up until now, whilst our members are very clear at describing key risks in their product literature, there has been no alphanumeric risk value assigned to each product such as is available within the funds industry,” said UKSPA chairman Zak De Mariveles.
“The introduction of the UKSPA Risk Ratings is therefore a landmark development in this market. These ratings not only give advisers the tools they need to be able to match products more closely to their clients’ needs, but they demonstrate the high levels of transparency that our members are committed to providing,” De Mariveles added.