The EEA Investors’ Group said that, rather than “victimising” IFAs by urging investors to make complaints against them, the Financial Conduct Authority should have worked with the Guernsey Financial Services Commission to prevent the Guernsey-based fund from being sold incorrectly.
“Instead, it continued to harm UK IFAs and investors by invoking lengthy and expensive compensation proceedings,” the group added.
The comments relate to a warning issued last week by the FCA, which urged investors into the life settlements fund to “make a complaint to the firm which sold the investment”, before “time runs out” due to the Financial Ombudsmen Service’s 1 December 2014 deadline for complaints.
"Toxic"
In the 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.”
Referring to a previous notice from the FCA, which controversially described traded life policies as “death” bonds, the Investors’ Group said the regulator should be working “quietly and professionally behind the scenes” with the company’s auditor, EY, for the “maximum benefit” of the remaining investors into the fund.
It added that, because of the FCA’s notice and the FOS’ complaint deadline, it now has no option but to register complaints against IFAs, “if only to preserve [its] options under the Ombudsmen scheme”.
Despite this, law firm Regulatory Legal is currently urging investors into the fund to come forward “as soon as possible” to see whether they have a potential complaint.
"Confident"
The company said it is “confident” that claims will be successful, because the FOS has already upheld several complaints against the product.
Paralegal, Tobias Haynes, said assistance will be given by the company on a “first come first serve” basis, due to the high number of complaints it expects to receive.
“We understand that several investors are looking into the potential of pursuing the regulator in respect of the funds,” he said. “However, investors should protect their position and explore all possible routes of claim to recover their capital, including advisers.
“We aim to assist as many investors as possible, but will be confined to only that amount which we can physically deal with.”
Last week, in response to the FCA’s latest statement, EEA published a letter on its website defending the role of advisers which sold its life settlements fund.
EEA said it wanted to clarify that the fund was not directly marketed by it to retail investors and was only sold to “regulated institutional investors (such as life insurance companies) and FSMA authorised independent financial advisers, for them either to recommend the fund to investors.”
It added that advisers play a valuable role, enabling “certain retail clients (such as sophisticated individual investors and high net worth individuals) to have the opportunity to invest in a broader range of products”.
