In a letter from the European Court seen by International Adviser, members of the Action Group for Life Settlements – many of whom invested in the Guernsey-registered EEA Life Settlements Fund – were told their application was “inadmissible”.
The Court emphasised that this decision is final and is not subject to an appeal.
The letter, dated 16 July, reads: “ln the light of all the material in its possession and in so far as the matters complained of are within its competence, the Court found that the admissibility criteria set out in […] the Convention have not been met.”
“Inflammatory and inaccurate”
The EEA Life Settlements Fund was launched in 2005 and suspended in November 2011 after the FCA’s predecessor, the Financial Services Authority (FSA), said investments into traded life policies were “toxic” and possibly unsuitable for retail investors.
“The Court found that the admissibility criteria set out in […] the Convention have not been met”
This FSA warning had a negative effect on many life settlements funds, including the EEA Life Settlements Fund, and when the fund was revalued in June 2013 it was found to have lost $200m (£129m, €183m) of its “fair value”.
Two action groups have formed since the suspension of EEA Life Settlements: the Action Group for Life Settlements and EEA Investors’ Group.
The EEA Investors’ Group argue that the fund was mismanaged and mis-represented to investors, financial advisers and regulators.
The Action Group for Life Settlements said the FCA should compensate investors for its use of “inflammatory and inaccurate” language. This claim had previously been rejected by the regulator in April 2015.
Legalistic brick walls
David Trinkwon, coordinator of the parallel action group EEA Investors’ Group, said he was sorry to see the claim from the Action Group for Life Settlements “run into legalistic brick walls”.
He said members could join his action group which continues to challenge EEA and its associated companies and advisers, as well as the auditors and regulators involved.
EEA allowed customers to invest in life policies that had been bought in the US from people who became terminally ill after taking out the policies and could only cash in their policies for a small amount.
According to the EEA Investors Group, maturities for the first half of 2015 were $27.5m, which compares drastically to predictions from the EEA which estimated a maturity of more than $200m for the full year.
