“If the Authority proposes to make any rules (or issue guidance) it must publish a draft of the proposed rules in the way appearing to it to be best calculated to bring them to the attention of the public.”
So says the Financial Services and Marketing Act (FSMA 2000), and it makes good sense.
If the FSA had done this in 2011, instead of shooting first and asking questions later, they would have been informed by the subsequent consultation and the guidance published in November 2011 might have been replaced by the finalised guidance published six months later in 2012.
The finalised guidance made no mention of toxic assets and drew no comparisons with illegal ‘Ponzi’ schemes. TPLIs, it stated, are also known as Traded Life Settlements or Senior Life Settlements. No reference here to Death Bonds. If the FSA had complied with their own rules and consulted, none of the damaging, pejorative language would have found its way into their press release or the headlines that directly caused a run on redemptions and the suspension of the EEA Life Settlements fund.
The consultation also brought out constructive suggestions from the 55 people, companies and industry bodies that responded. And some of these were incorporated in the finalised guidance. But it was already too late. By the time this guidance was published in 2012, the damage had been done and thousands of savers no longer had access to their funds. The good counsel of experienced professionals was wasted because the FSA shot first and asked questions later.
Over three years later the secondary market for TPLIs continues to suffer from this serious error of judgment with the announcement today from EEA LIfe Settlements that the Net Asset Value of remaining policies is to be revalued. Not because of any changes in mortality rates, premiums or the maturity value of the policies, but simply because the secondary market remains discounted due to the pent-up demand for redemptions caused by the FSA. The underlying policies continue to hold the maturity values they did prior to 2011 but if investors can no longer wait for the maturity of these policies, they will be forced into heavy discounts.
The pain just goes on and in true civil service fashion, the FCA hides behind its expensive lawyers and schemes to avoid taking responsibility and prolong the suffering they have already caused. But we have a message for them.
Not this time – we’re coming for you and the longer you draw out the pain, the more we’ll reflect back to you.
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Action Group For Life Settlement Fund Investors 
……..”and in true civil service fashion, the FCA hides behind its expensive lawyers and schemes to avoid taking responsibility and prolong the suffering they have already caused. But we have a message for them.
Not this time – we’re coming for you and the longer you draw out the pain, the more we’ll reflect back to you.”
I truly hope your action succeeds and also becomes a catalyst for regulatory accountability.
I recall a parliamentary investigative committee comment on the actions of Sir Cullum McCarththy, the then FSA chairman, as being a “World Class ducker and diver”. !!
I would appear that the culture is endemic
very well put, thank you for all your efforts.
Thank you Keith!