The Financial Services Authority (FSA) has hinted it may impose stricter regulatory requirements on firms recommending traded life policy investments (TLPIs) after issuing final guidance stating they should not be promoted to most retail investors.
The regulator said the guidance is an interim measure, and that it will soon consult on new rules imposing restrictions on the promotion of non-mainstream investments, including TLPIs, to retail investors.
In November, the regulator announced its intention to act on unsuitable sales and promotions of TLPIs. It compared the products to 'ponzi schemes', language that attracted criticism from advisers and providers.
Today, the FSA confirmed it does not believe the products should be marketed or sold to most investors after uncovering evidence of "significant problems with the way in which TLPIs are designed, marketed and sold".
As a result, it said it will consider whether to put in place further requirements on firms involved with TLPIs, in line with its consumer protection objective.
Currently, firms must conduct "extensive research" before deciding if a TLPI is suitable for a particular client. It must also be provide "detailed and robust justification for its reasoning", the FSA's guidance states.
If firms identify problems or compliance failings, the FSA said it expects them to take action, such as by reviewing client files and, if necessary, identify whether it is "liable to the customer for any of the detriment or loss suffered".
Caring for children and elderly relatives
Similar to June 2007
Square Mile’s series of informal interviews
Fine reduced to £60,000
Two roles created