05/12/2011 - FSA To Ban Traded Life Settlement Bonds
FSA To Ban Traded Life Settlement Bonds.
TLPIs are known as ‘death bonds’ because investors put their money into a pooled investment or fund which invests in US life insurance policies. Essentially, investors are betting on when a particular group of US citizens will die and if these people live longer than expected then the investment may not function as expected.
Life settlement policies were the underlying investment behind Keydata products, which collapsed causing an an industry interim levy of £326m, with advisers paying £93m and fund managers paying £233m.
According to FSA managing director Margaret Cole, the failure of these products in the past has led to significant consumer detriment and we are concerned that new investors will suffer unless we take the necessary steps now to prevent their sale and distribution.
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