Within the FSA’s detailed consultation on a retail sales ban for unregulated collective investment schemes (Ucis), there lies a subtle but significant shift in the regulator’s rhetoric.

In the space of nine months since its proposal to ban life settlements fund sales, the FSA appears to have taken strides to tone down its stance.

Few advisers will need reminding of former FSA managing director Margaret Cole’s infamous “toxic” comments about life settlements products, made back in November 2011.

“TLPIs are toxic products which pose significant risks for retail investors,” Ms Cole - now at PricewaterhouseCoopers - said.

Much criticism was heaped on the FSA for taking such an out-of-character stance and using such emotive language, including a reference to “Ponzi schemes” and the assertion that life settlements investments were “completely unsuitable”.

No sooner had her words hit the press along with a proposed ban on the sale of life settlements to retail investors, then the Guernsey-based EEA Life Settlements fund was forced to close to redemptions and new investments because of a wave of withdrawal requests. Investors are still unable to access any money held in the EEA fund, in spite of many being previously satisfied customers.

The fact that the FSA’s announcement had such unintended consequences must have been a topic of much discussion in the corridors of the FSA’s offices in Canary Wharf.

Publicly the FSA has defended Ms Cole’s statement, claiming the redemptions were proof that people did not understand the risks involved.

However, nearly nine months on and it appears the regulator has taken heed of the battering it has taken at the hands of advisers, the press and investors in life settlements, and made significant attempts to avoid such a farce again.

Take, for example, the open admission that existing investors in Ucis may suffer liquidity issues as a result of this latest consultation.

In its cost benefit analysis in the Ucis consultation the FSA states: “There is a risk that existing customers may react to the consultation and request redemptions that may in turn lead to liquidity problems and, possibly, to capital losses for customers.”

EEA investors will no doubt ask why this acknowledgement was not in November’s life settlements paper.

It also emphasises that advisers are not banned from advising at all on Ucis - telling investors to sell out or even to stay invested is fine.

The FSA even recommends unadvised Ucis investors to seek out independent financial advice on the investment and their options.

“If they no longer think the investment is right for them, they should speak to a financial adviser to discuss their options,” the FSA says.