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Life settlements body blasts FSA over ‘toxic’ warning
Regulator should consider targeted regulation rather than outright ban, argues European Life Settlement Association.
The European Life Settlement Association has issued a strong response to the Financial Services Authority’s consultation on retail traded life policy investments, saying that it objects to the regulator’s “mis-use” of the word ‘toxic’ in its impromptu warning over the products.
The FSA dubbed the products “toxic” in a three-page consultation paper published last year. The consultation, which proposed a ban for the sale of the products to retail investors, prompted a rush of redemptions on the EEA Life Settlements fund, which had to be suspended.
Anna Bailey, chair of ELSA, led a delegation to meet with the FSA on 5 January 2012.
Responding to the proposed ban, Ms Bailey said: “ELSA’s major concern is that the FSA had not sufficiently consulted with industry participants before announcing an unprecedented warning.
“ELSA objects to the FSA’s misuse of the word ‘toxic’ to describe an asset class that provides tremendous benefits to consumers and is an attractive and sound asset for many investors worldwide.
According to Ms Bailey, the ban would have negative consequences beyond retail investors, perhaps affecting other retail markets even beyond UK borders.
Instead, ELSA recommended the regulator work with companies to devise targeted regulation to protect retail investors rather than ban the products outright.
