November 28, 2011
The European Life Settlement Association (ELSA) responds to the FSA warning
For immediate release
28 November 2011
The European Life Settlement Association (ELSA) responds to the FSA warning on suitability of Life Settlements for UK Retail Investors
ELSA believes that the FSA has correctly warned that Life Settlements present significant risks to unsophisticated retail investors.
ELSA published in September 2010 a Code of Practice to highlight the risks and rewards of Life Settlements as investments both for institutional and retail investors.
The FSA’s detailed analysis of the potential risks of retail investments is Life Settlements are timely and to be welcomed as are its announcement of a consultation process to be concluded in January 2012. ELSA intends to participate in the ongoing discussions with the FSA in the EU and continue its role to educate the marketplace, including the media, institutions and retail investors about the full extent of the risks that should be understood and work with regulators to find appropriate guidance.
Anna M Bailey, chair of ELSA said today 28 November 2011:
“ELSA has been in regular contact with the FSA since February 2010 in regards to the FSA’s concerns about retail investors.
ELSA consulted with the FSA before publishing its Code of Practice in September 2010. The Code highlights in significant detail the risks and well as the rewards of Life Settlements.
ELSA will collaborate fully in the consultation process announced today by the FSA and will continue its role of keeping European regulators fully briefed on its ongoing efforts for industry self regulation and investor education.”
Michael Fugler, deputy chair of ELSA said today November 28 2011:
" I strongly agree with the FSA that historically many product structures sold to retail unsophisticated investors have been complex and opaque and a number of the past products were toxic and should have required a significantly heightened degree of warning and clarity before investment considerations were made, but one must remember that in the early stages of this industry there were few laws or regulations which tended to initially attract some unscrupulous people, so, unfortunately the Life Settlement industry like other industries before it, got off to a difficult start. There have been many unregulated industries in our past such as Oil & Gas, Gold & Silver Mining, even Wall Street and the crash of 1929, that initially were unregulated and they too attracted unscrupulous people but any market that demonstrates a solution to a large market need and some consistency for profitability will mature, settle down, develop industry standards and become regulated which is what has happened to the Life Settlement market. I applaud the FSA for engaging discussions in Europe around the MiFID review, AIFM Directive and with other European supervisors to find a solution and to provide greater consumer education and guidance about this industry sector and its future and I encourage them to give a balanced and fair review of what the future could hold for Life Settlements in the proper context. I believe that this asset class could be a stable alternative, non-correlated investment in the market as we move forward into 2012, but the market needs to be reasonable in valuation, realistic for returns, deal with advisors and service providers that are knowledgeable and trustworthy and as the FSA position correctly stated, conduct extensive research and be able to provide robust justification that a particular investment might be suitable for a particular retail investor. Maybe there are or will be structures and sponsors who can develop product in the future worthy of consideration, let’s keep an open mind and have a healthy dialogue."
NOTES TO EDITORS
ABOUT ELSA
The European Life Settlement Association (ELSA) was founded in 2009 to set standards for the European life settlement industry. We represent European funding sources, service providers and intermediaries in the Life Settlement market who are looking to promote transparency by providing accurate, authoritative information to retail and institutional investors, regulatory bodies and the media. Our focus is on the promotion of best practice and the positive development of the European Life Settlement industry’s reputation amongst all stakeholders. We encourage fair competition and investor protection within the European market.
For further information please contact:
Anna M. Bailey
ELSA Chair
E: ABailey@mlflexserv.com
T: +1 240 333 7366
Michael Fugler
ELSA Deputy Chair
E: michael@welcomelife.com
T: +1 917 834 7250
Paul Winner
ELSA Director
E: paul@elsa-sls.org
T: +44 798 4160 102
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