Following a request under the Freedom of Information Act, I have just received confirmation that either the FSA, or the Complaints Commissioner did lie, or attempt to deceive, when, in a decision letter from Sir Anthony Holland the following was stated.
“I would also like to add that, from the information presented to me by the FSA, it is clear that it was in correspondence with a number of TLPI providers before its statement of 28th November 2011, and that these providers did not object to the publication of the statement.”
Clearly, to assert they did not object to the publication of the statement, they would need to have seen it. Yet, the FCA have today confirmed; “However, we did not pre-consult on the wording of the announcement.”
Further, the FSA (or Complaints Commissioner) attempted to create an impression that this announcement was somehow endorsed by TLPI providers but the information now provided under the Freedom of Information Act (following further pressure) shows that in the consultation that followed the announcement, the FSA were criticised for their use of words and they have subsequently agreed to modify their language.
They have today confirmed the following.
“When publishing the guidance consultation, the FSA should have taken into account the possible impact of its warning on existing TLPI investors as part of our statutory objectives of consumer protection and maintaining market confidence;
Many felt that the use of the terms ‘death bonds’ and ‘toxic’ were overly emotional and inflammatory;
We should not have said that certain TLPI models carry risks that make them appear to share some of the characteristics of Ponzi schemes.”
They went on to say; “We worked with TLPI providers before publishing the guidance to ensure they had plans in place to deal with an increase in redemption requests.”
Yet no firm that I have found supports this assertion, including the largest, EEA Life Settlements, or the Skandia group.
Finally, they have today conceded that their language was inappropriate after months of denial.
“However, we accept that the expression ‘toxic assets’ has been used in the press in relation to financial instruments such as CDOs and CDSs and that our use of it here may have led to some confusion for some customers.”
“This does not mean that we have found that some TLPIs are Ponzi schemes and no such allegation is made in our guidance or accompanying communications, nor have we said that this is a trait common to all TLPIs. We will, however, update the wording of the guidance on this point to clarify our meaning.”
You might be forgiven for asking, if the link between TLPIs and Ponzi schemes was so tenuous, why any comparison at all was drawn in the announcement of November 2011? And given that their own consultation period with the industry revealed that the use of the term ‘Death Bonds’ was “overly emotional and inflammatory”, why did they continue to use it and why did the Complaints Commissioner defend its use in a statement to ITV television earlier this year?
Today’s climb-down demonstrates beyond doubt, not only that the FSA behaved unprofessionally, but that the Complaints Commissioner may well have been complicit in their attempt to cover it up. It is abundantly clear that the Commissioner and his office lack the necessary independence to provide any form of governance over the FCA, or the necessary escalation point to the general public when they seek redress.
Today’s findings strongly support our claim and also underline the need to support the petition to the government for reform of the FCA: http://epetitions.direct.gov.uk/petitions/63482
Action Group For Life Settlement Fund Investors 