The European Life Settlement Association (ELSA) has launched a retail market consultation into the practices and issues that surround life settlements.

The consultation, which will help to inform the content relating to retail investors in the impending Code of Practice from ELSA, published later this summer, will help to engage specifically with the independent financial adviser (IFA) community. It follows questions raised by the Financial Services Authority (FSA) about the asset class earlier in the year.

The Association of Independent Financial Advisers (AIFA) will distribute the IFA life settlement consultation to its members, and the questionnaire will also be made available through the distribution channels of ELSA’s members, the media and other interested parties.

“We recognise that a lot of questions have been posed at the retail market in particular when discussion this asset class,” commented Patrick McAdams, investment director at SL Investment Management and ELSA chairman.

“In the wake of continued uncertainty around Keydata and Lifemark, intermediaries are rightly looking much more closely at product structures and wishing for greater transparency than ever.

“We intend to use this IFA consultation as a valuable feedback mechanism to ensure that we cover in our comprehensive Code all the critical issues for this market. Separately, we have given the FSA sight of a draft of the Code, ahead of the response from IFAs, to ensure it is moving in the right direction and goes far beyond current Conduct of Business rules in the UK.

“Our aim in taking a principles-based approach is to encourage greater standards and more disclosure across the industry, and move beyond a simple box-ticking exercise to be compliant. In our view, when principles-based regulation is detailed and focused, it can be highly effective in setting standards, defining areas of responsibility and highlighting issues of transparency.”

McAdams added that investors can only begin acknowledging the potential of life settlements once these issues are addressed.

The consultation is available here.

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