Almost a fifth of complaints made by consumers about the FSA in 2011/12 were sparked by the regulator branding traded life settlements as high- risk, “toxic” products.
A total of 308 consumer complaints were made against the FSA between 1 April 2011 and 31 March 2012. A freedom of information request, submitted by Money Marketing, has found 49 complaints, or 16 per cent, related to the FSA’s November guidance consultation on traded life settlements.
The FoI response says consumers took issue with the FSA’s description of life settlements as “toxic” and “the perceived detrimental effect this statement had on consumers’ investments”.
In November, then FSA managing director Margaret Cole said traded life settlements are “toxic products” which had caused “significant consumer detriment”.
The move prompted the EEA Life Settlements fund to suspend redemptions at the end of November. It is yet to reopen to investors.
An FSA spokeswoman says: “The reaction of retail customers to the publication suggests many did not understand the risks to which they were exposed until the guidance clarified it for them.”
Fishburns partner Harriet Quiney says: “Histrionic and sweeping statements such as Cole’s are bound to increase consumer anxiety and clear a path for claims management companies to charge down.”