The Financial Services Authority (FSA) has uncovered “serious issues” after reviewing aspects such as promotional literature, clarity of information and quality of advice.

The review encompasses a complex field where investors are sold products which, for example, track a certain index using derivatives and offer to cap possible capital and gains losses.

But these guarantees are generally offered by third parties and the risk in the product is that of default by the third party - such as Lehman Brothers.

Dan Waters, retail policy director at the FSA, said: “This is a hugely complex area and during our review we have looked at promotional literature, clarity of information, quality of advice, sales systems and controls, involving plan managers, providers and advisers.”

He added: “There is still much for us to do... but I can confirm that we have found serious issues and will be taking action against firms.”

The FSA will publish some of the findings of its review in October. Individual complaints to the Financial Ombudsman had been put on hold while the FSA considered the wider implications for consumers but these can now be taken forward, the watchdog added.

The news comes on the eve of the first anniversary of Lehman Brother’s collapse - which threw the financial system into near-meltdown and led to Government bailouts for a host of banks worldwide.