It’s a very silly thing to say and – I don’t want this to sound patronising at all – I think he needs to get out more.”Channel 4 said: “We do not think these comments justify a response. They are clearly ludicrous.”About 11 per cent of the channel’s staff are from ethnic minorities, a figure it is anxious to increase. But this is because these dramas are set in urban areas where people from ethnic minority backgrounds make up as much as 30 per cent of the population so it would seem unrealistic to the audiences watching these dramas without this variety of characters.”Alan Yentob, the BBC’s director of drama, entertainment and children’s television, added: “I think Ludo is a great guy; but I don’t agree with him on this at all. Political correctness has got completely out of hand and requires that the imbalance be readjusted.”A spokeswoman for the BBC, which recently began a new black sitcom, The Crouches, said: “The BBC has a duty to serve all of its audiences and although ethnic minorities make up 9 per cent of the UK population (4.6 million people, according to the 2001 census), some of our programmes – EastEnders, Holby City and Casualty for example – do have more than this representation. I am all in favour of black advancement, but there’s now hardly a TV, pub, police station, soap, vox pop or ad without rather more than its fair share of black participation.”"The Statistical Office tells me the proportion of all ethnic groups (blacks, Indians, Pakistanis, Asians) to whites in this country is no more than 7.5 per cent. “Three years ago it was, ‘These are the income rates we should offer and we will do whatever we have to do make sure we get them.’ Now it is, ‘Let’s design a safe, less risky product that gives people some degree of protection and see what income rate we can offer it at.’ Most stock-market-linked bonds now only offer income rates of 5 per cent a year.”.

Mr Connolly said yesterday that most new launches are on five-year terms, have little downside gearing and tend to follow the mainstream FTSE 100 index.”The emphasis has now shifted on the people designing these products,” Mr Connolly said. It has to be made clear that high returns equal high risk.”But with only 250,000 investors in total, any further fines are not likely to be in the magnitude of yesterday’s fine against Lloyds.Stock-market-linked precipice bonds are, in the meantime at least, pulling themselves back from the edge, following the shocking losses they have delivered. Independent financial advisers account for about 12 per cent of the market and are also being scrutinised.”We do not have a problem with the products as such,” a spokesman for the FSA said yesterday “But we are concerned about the marketing of the products. While the risks are explained, sometimes only little is said about what happens to capital. But only six of the stocks stayed above their safety net of a 33 per cent fall. Investors have lost up to 50 per cent of their capital.Most equity investment is considered on a five-year outlook, which gives the chance for shares to recover if markets tumble. But precipice bonds were mostly set at three-year terms, narrowing the odds of an unrecoverable downturn.

They also cap the upside gains to be made.This means that investors that bought in 2000 caught none of the bull run in the market, took the full brunt of the following three-year slump and their investments have matured before the recovery can really get under way.The FSA issued its first warning on the potential downside of precipice bonds in 1999 and has since made five more as the extent of the losses they can induce became increasingly apparent.The regulator has been investigating a number of companies that have sold precipice bonds and this summer it pulled up seven firms for misleading advertising that did not make the risk to capital clear. As it became more difficult, providers found more complex – and riskier – ways of delivering it. This led to the emergence of bonds linked not to the familiar old FTSE 100, but to the more specialist Nasdaq 100 and the Eurostoxx 50. “This downside gearing effect multiplies the loss of capital you can experience, which has been one of the biggest problems with these bonds,” Mr Connolly said.This downside gearing is an example of the lengths the providers of precipice bonds have had to go to secure the double-digit income offers. The plan has a 25 per cent safety net up to which the index can fall without risking capital. But if the index closes more than 25 per cent down on its start position, investors will lose 2 per cent of their capital for every 1 per cent it closes below the safety net.

The FTSE 100 closed at 4,202 yesterday.There are some investors staring at the bottom of even higher ravines. The NDF Extra Income & Growth Plan 3 started out following the Eurostoxx 50 in 2000 when it was 5,091. The plan matures next week, and the index is currently 106 per cent lower than where it was three years ago.This particular plan has another nasty sting in its tail, common in precipice bonds, in the form of downside gearing. For example, unless the FTSE 100 rises 50 per cent in the next six weeks, investors in AIG Life’s Stockmarket Income Bond 1 could see a lot of their capital disappear.