The regulator has had its sights set on the traded life policy industry since November 2011 when it released a statement warning that retail investors should not invest in what it controversially described as “death bonds”.
In that announcement it also branded traded life policies as “toxic” saying it had found “significant problems with the way in which they are designed, marketed and sold to UK retail investors”.
It is claimed by an “action group” which was set up to represent investors in the Guernsey based EEA Life Settlements Fund, that the FCA’s announcement caused a run on the vehicle leading to it being suspended.
There was also relatively widespread criticism of the FCA’s handling of the subject from the advisory community, which has now become the target of the City watchdog’s latest salvo.
Neil Shillito, director of SG Wealth Management, wrote an open letter to Hector Sants who was head of the FCA’s predecessor, the FSA, at the time. In the letter, Shillito said he was “dismayed and shocked at the FSA’s pronouncement”. He went on to describe the statement as “ill-thought out, partial, emotive and [using] language unbecoming of a regulatory authority”.
In today’s statement, the FCA points out that there is a limited time in which investors can make a complaint and that for some, this will begin to expire from 1 December.
In an accompanying statement, the FCA has renewed its call for advisers to “re-examine their sales of these products to check their compliance with our rules and principles” and to contact their FCA supervisor “where significant mis-sales are discovered”.
EEA continues to manage assets and, in fact, began to pay a total of $14.6m to registered “run-off” share investors in the Life Settlement Fund at the end of August.
