EEA Fund Management has welcomed yesterday's "helpful" guidance from the FSA, on its intention to ban the sale of traded life policy investments (TPLIs) to retail clients.
Dealings in the £600m fund were suspended in December after "unprecedented" redemptions, following the regulator's initial announcement, which labelled the asset class as containing "Ponzi schemes" and "death bonds".
Marketing director Peter Winders said the finalised guidance "clarifies a number of points that were not wholly clear in the original consultation guidance".
"In particular, we agree with the FSA's statement that TLPIs should not be promoted to the vast majority of retail clients, and this has always been EEA's general position," he said.
"We also note that the FSA agrees that TLPIs may, on occasions, be suitable for particular retail clients, provided that introducing advisory firms are able to provide detailed and robust justifications for their suitability assessments.
"We also appreciate that the FSA's final guidance no longer uses the terms 'toxic'or 'Ponzi', and we think the FSA is right not to use these terms."
Advisers were critical of the FSA's "reckless" language in the initial announcement, telling IFAonline in December clients had been unnecessarily inconvenienced.
EEA revealed three restructuring options in a letter to bondholders in March, which Winders today said were currently being finalised.
Clients can "continue to hold existing shares in cells in the continuing fund, with some additional dealing restrictions (such as a lock-in period)."
Alternatively, existing shares in the fund can be exchanged for shares in "a run-off vehicle," where distributions will be made to shareholders as policies mature and proceeds are received.
For those requiring immediate access to cash, there may also be an option to sell their shares to institutional investors, chairman Mark Colton wrote.
SL Investment Management (SL) also welcomed the announcement.
SL investment director Patrick McAdams said: “We are pleased to see that the FSA has decided to expand the breadth of its knowledge before making any final decisions as to the future rules for promotion of TLPIs for retail investors.
“We will continue to work with the FSA and other regulators in jurisdictions in which we operate, to help ensure that TLPIs are marketed with sufficient clarity to allow appropriate and well informed investors to understand the extent of the risks and undoubted rewards offered by these products.”
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