Bankers Ordered to Halt Pitching Range Target Profit Forwards Amid Suitability Concerns

UBS has instructed its bankers to scale back sales of its most complex foreign exchange derivative, Range Target Profit Forwards (RTPFs), after a series of heavy client losses linked to sharp currency moves following U.S. President Donald Trump’s “Liberation Day” tariff announcements in April 2025.

The Swiss banking group’s move, first reported by the Financial Times, applies to many UBS markets and wealth-management locations worldwide. Advisers have been told to stop pitching RTPFs to a broad base of clients, restricting them instead to a smaller pool of highly sophisticated investors evaluated on stringent suitability criteria.

RTPFs are structured FX forward contracts that allow clients to earn enhanced profit participation if exchange rates remain within a pre-defined range, but can result in unlimited losses if the market shifts outside that window. UBS executives initiated the internal review after U.S. dollar volatility triggered by Trump’s tariff threat on EU imports caused several clients to see their positions unwind at a loss.

According to UBS communications, more than 100 goodwill payments have already been made to affected clients, with the bank establishing a dedicated task force to handle complaints. Role-play training sessions have also been introduced to bolster bankers’ ability to assess counterparty risk and explain product complexities before recommending RTPFs.

Industry observers note that the decision reflects broader scrutiny of sales practices for high-risk structured products across the sector. “UBS is taking proactive steps to shore up investor confidence,” says Sofia Verbruggen, an analyst at Kepler Cheuvreux. “However, this episode underscores the importance of robust governance and client protection measures in wealth management.”

Regulators in several jurisdictions have long imposed restrictions on the sale of wood-chipper derivatives like RTPFs, recognizing their potential to inflict outsized losses on retail clients. UBS’s updated policy now aligns with tighter guidelines in markets such as the UK and Australia, where such instruments face outright bans or severe sales limitations.

Critics argue that the incident also highlights potential lapses in the bank’s own suitability assessments. Legal experts warn that, should investigations reveal systemic mis-selling, UBS could face enforcement actions or class-action suits. The bank, which acquired Credit Suisse in 2023, remains under the regulator’s microscope as it integrates two large organizations with differing risk cultures.

Looking ahead, UBS plans to conduct a comprehensive review of its entire structured-products franchise. Senior management will report findings to the board later this year, with any further policy refinements to be announced alongside third-quarter financial results. Meanwhile, the bank continues to offer RTPFs selectively to clients whose risk profiles and experience justify their use.

The UBS case adds to mounting pressure on global banks to reevaluate complex product offerings amid a volatile geopolitical landscape. As tariffs and other sudden policy shifts become more common, financial institutions and investors alike are confronting the challenge of balancing yield-seeking strategies with prudent risk management.