Analysis: FSA guidance on life settlement investments

Five months after the FSA warned the industry not to promote traded life policy investments to the public, it has now confirmed its position and said it would soon place significant restrictions on the products.

Sometimes described as ‘death bonds’, TLPIs are pooled investments that invest in US life insurance policies. The investment involves betting on when a particular group of people will die. If they die when expected, the fund makes profits; if they live too long, the fund might not make any returns.

The FSA found problems with the way these funds were designed, marketed and sold to retail investors in the UK. It also took note of the fact some of these funds have failed.

Keydata, the now-defunct structured products provider, distributed bonds issued by Lifemark, a Luxembourg based investment vehicle that invested in life settlements. Investors who lost money due to Keydata still have compensation claims moving through the Financial Ombudsman Service.

For the complete story from FT Adviser, click here.

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