Bringing you live news and features since 2006 

Elsa welcomes FSA speech on life settlements


The European Life Settlement Association has welcomed the frank address given by the UK Financial Services Authority at the Elsa/Lisa European Life Settlement Trade Mission in London. 

At the centre of the regulator’s comment was some concern relating to disclosure and the quality of marketing materials relating to traded life policy investments – the FSA’s collective term for products that invest in traded life policies, senior life settlements or viatical settlements.

The FSA suggests that much more detailed and prominent risk warnings should be carried within providers’ literature, accompanied with illustrations as to the conditions under which a product will perform and how this may be affected.
Elsa has been working on a code of practice that will be launched in the coming weeks and has been in discussion with the regulator making clear the scope of the guidelines as part of the process.
However, the FSA also made clear that it did not inherently oppose the use of life settlements by sophisticated retail investors. Moreover, when asked expressly about whether it supported the view of the American Council of Life Insurers, which recently attacked the existence of the secondary market by calling for a securitisation ban, the regulator made clear that there was no reason to restrict securitisation, attributing life insurers’ opposition to simple vested interest.

Patrick McAdams, investment director at SL Investment Management and Elsa chairman, says: “Elsa has been determined to bring transparency to an industry that admits it has not always got it right in the past. We welcome both the dialogue and the commitment from the FSA, in particular its assertion that it is intervening earlier by shifting its focus upstream for all complex products, including those backed by life settlements. Ever since its formation last year, Elsa has been championing greater regulatory consideration of this sort, which would force much more detailed consideration and disclosure of asset risks and how these are managed.”
Doug Head, executive director at the Life Settlement Association, adds: “Banning securitisation would force direct ownership of policies on retail investors looking to get into this market. This is risky as owning all or part of a single policy lacks the necessary diversification investors require. By contrast, the popular classic fund structure, in which shares or bonds are issued relating to a pool of hundreds of policies, provides a source of much greater diversification and thus protection. In short, securitisation is essential to protect ordinary investors who wish to invest in traded life policies safely.”

Latest News

Morningstar has published a review of the European ETF market for the first quarter 2024, which finds that it gathered..
ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..

Related Articles

US ETF issuers of active ETFs are facing an increase in fees from the big custodian firms, such as Charles...
Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by