An IFA has written a scathing open letter to Financial Services Authority chief executive Hector Sants, calling for his resignation over the closure of an EEA life settlement fund just days after the regulator said it wants to ban the investments.
EEA suspended dealing in its £600m Life Settlements fund on Wednesday, due to "unprecedented" levels of redemption requests, after the regulator announced on Monday it would seek to ban TLPIs.
Chartered financial planner Terence P O'Halloran of London-based O'Halloran & Company, has accused the FSA of acting with 'no regard for the consumer'.
See O'Halloran's letter in full below.
Dear Mr Sants
You have deigned to ignore me for virtually three years and even if you don't agree with my view, one would have hoped that you would take some note of my experience and qualifications before totally ignoring me.
The actions taken by your staff in respect of ‘Life Settlement Funds' is irresponsible and born of almost total ignorance of the marketplace.
I now notice that EEA Life Settlements have suspended dealing which merely creates concern and worry in the marketplace unnecessarily. Pre-emptory withdrawals following your colleagues ill advised comments is the cause.
The situation with life settlement funds, where you are once again at the centre of creating a run on the market is the equivalent of the queues outside of Northern Rock; and for whose benefit?
The FSA appears to have no regard for the consumer whatsoever and yet it is in the consumer's name that you purport to issue statements, the result of which is the travesty we are now witnessing.
Where was your action in 2007 following the ‘arrow' check on Key Data and their Life Settlement Fund? Where was your action against the man who allegedly, fraudulently took money from the fund for his own purposes?
The most important question that I should ask you is: "How are IFAs suppose to know so much about these financial instruments when the FSA, the ultimate guiding body and supposed "leader in world regulation," (there is a joke if ever there was one) does not know sufficient to take action to protect consumers before they get involved with the product provider that is so clearly sailing against the wind.
Northern Rock were ‘borrowing short' and ‘lending long' for twenty five years.
Yet the head of the FSA department that was responsible for that organisation, prior to its collapse, walked away with hundreds of thousands pounds not only in salary but with compensation for loss of office.
Yet you and your organisation have the temerity to seek to fine IFAs who, with the best will in the world, are merely trying to do their job for their clients in the knowledge that your umbrella is supposed to be open sufficiently far to protect us all from the fall out that such poor business practices create.
Where is the umbrella? It does not exist.
I read recently that you "need to pay more for your staff to get quality staff."
Mr Sants; I have applied for eight positions within your organisation; all managerial positions, all at lower salaries than you are currently offering and all that I have received is a letter from your recruitment agency telling me that I am too cheap and you do not need my expertise. You do me an injustice Sir.
It is not IFAs who should be held to account: it is you and your cohort within the FSA who should be fined personally for failure to serve the public as you were mandated to do. You have let IFAs down.
If I could think of one point where the FSA have actually protected the consumer I would punctuate this letter with some applause but, "you know what," as Simon Cowell would say: "I can't find a thing." Not one. In how many years of your existence and the PIA before you?
I think you need to explain, in detail, ‘from the top,' why EEA Life Settlements is a risky environment for retail investors?
I think you need to explain how something as carefully calculated as the incidence of death on a Whole Life Policy coupled to close medical examination is more risky than overpriced gilts or exposure to the stock market.
You and your organisation are a disgrace and to think that you personally will head up the successor organisation does not bear thinking about in terms of value of money for the salary that you are paid, by my industry.
I am not alone in my thoughts or my condemnation of your senior management's action. The suspension of EEA Life Settlements dealing really should be the nail in your coffin (metaphorically speaking of course).
You should do the decent thing and resign, and take your unthinking managers with you.
Terence P O'Halloran BSc FCII AIFP
Chartered Financial Planner
The chairman isn’t answering his email
Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea