The regulator created a furore last year when it first came out against TLPIs (also referred to as death bonds) calling them "high risk and toxic".
At the time it seemed to have set its sights on banning the sale of TLPIs altogether, which many said would unfairly target one product group and would punish those providers that run such funds in a "fit and proper manner".
Today the FSA has confirmed its guidance is an interim measure and added it would shortly be consulting on new rules imposing "significant restrictions on the promotion of non-mainstream investments, including TLPIs, to retail investors".
This will widen the net further and may go some way to dampening earlier criticism of the FSA’s actions.
Its main concerns centre around the way TLPIs, which invest in life insurance policies typically of US citizens, are designed, marketed and sold to UK retail investors.
These are magnified by the fact "many of these products have failed, causing loss for UK retail investors", the FSA said.
Ucis also targeted
In an additional point, the regulator said many TLPIs take the form of Ucis, which cannot lawfully be promoted to retail investors in most cases, but have often been marketed inappropriately.
Peter Smith, the FSA’s head of investment policy, said: "The TLPI retail market is worth £1 billion in the UK and we were very concerned that it was likely to grow even more. At the time that we published our guidance over half of existing retail investments were in financial difficulty – even so, we were hearing about the development of new products intended to be sold to UK retail customers.
"This is an interim measure – we believe that TLPIs and all unregulated collective investment schemes should not generally be marketed to retail investors in the UK and will be publishing proposals soon to prevent them being promoted except in rare circumstances."
Let us know what you think about this latest twist in the TLPI tale below…
