I refer to last Sunday's article, 'Making it digestible for the ordinary investor'.

Ms Lorna Tan is on the right track. I would go further and suggest that the correct description or terminology be used for such investment products.

From her summary, it seems clear to me that the so-called investment is essentially an 'insurance contract', with the investor being the insurer. The investor is providing Lehman Brothers with insurance cover for the potential default in obligation of any one of the seven firms and the country named. The choice of wording - 'High Notes', 'reference entities' and 'credit event' - distracts the potential investor from the real substance of the contract.

A better and more accurate choice of wording would have alerted the potential investor to the insurance risks he is assuming - words such as 'insurance contract' for 'High Notes', 'specific perils' for 'reference entities', and 'default in payment event' for 'credit event'.

As a fellow of the Institute of Chartered Accountants in England and Wales, I still find it difficult to understand the nature of these investment products.

No disrespect intended, but I doubt if anyone who has graduated from a polytechnic or junior college or, for that matter, a university - even with a degree in finance or accounting - could really have a full appreciation of the underlying risks of such products. They really have no place in retail banking.

Ong Eng Hin

This article was first published in The Straits Times on November 30, 2008.