Some of the structured products (e.g. DBS HN5) are just down right bad even without the inherent flaws I'll be discussing.
About 2 years ago, I ordered a book from shipped from Amazon.com entitled "Fooled by randomness". I got interested in the book after reading a few articles by the author Prof. Telab. His theory was that a lot of the financial engineering models are flawed because of the "fat tails" that occurs in reality that is not (and cannot be) modeled in financial engineering. A fat tail probability distribution means that large movements and catastropic events occur with a far higher probability than in normal distributions used by financial engineers. Black Swan events are a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations (wiki). Because they are not modelled in financially engineered products, these products in reality carry far higher risks than what is designed. In other words, the products are flawed like bad medicine with potent side effects discovered only after they are sold to millions.
Almost all structured products sold in Singapore are linked to derivatives. Purchasers of structured products unknowingly become buyers/sellers of derivatives. I believe there is little use for these products and nobody actually needs them except those who make money selling them - the commission earners, banks etc. What do we lose getting rid of these products? Nothing really....Do you know why there are no minibonds protests in Malaysia? The Malaysian MAS took a look at these products couldn't understand them and decided not to allow these products to be sold to retailers at the banks. That decision saved thousands of Malaysians from the pain of losing their lifesavings. They do not have high flying scholars from Princeton or MIT but they have people with common sense not to allow risky complex products to be sold to ordinary citizens. That common sense saved their citizens from the suffering that 10,000 Singaporeans are experiencing right now.