Section 27 of the Financial Advisers Act

http://tankinlian.blogspot.com/2008/09/financial-adviser-act-section-27.html

Section 27 of the Financial Adviser Act require an adviser to ensure that the recommendation (i.e. to invest in the credit linked securities) is appropriate to the person being advised.

No licensee (i.e. adviser) shall make a recommendation with respect to any investment product to a person who rely on the recommendation, if the licensee does not have a reasonable basis for making the recommendation.

A licensee does not have a reasonable basis for making a recommendation to a person unless he has obtained information or conducted investigation into the investment objectives, financial situation and particular needs of the person.

Where a licensee contravenes this requrement and the person who relies on the recoomendation has suffered loss or damage, the licensee is liable to pay damages to that person in respect of that loss or damage.

I believe that many distributing financial institutions will be found to have failed in their duty. It is inappropriate to recommend the credit-lined structured product to elderly folks who do not understand the risk.