ELSA enhances service offered through life policy investments

Tuesday, July 13, 2010

The European Life Settlement Association (ELSA) is launching a new process for ensuring the quality of life settlements offered to consumers. The initiative, which focuses upon the creation of a retail marketing consultation, will be used to implement best practice for vendors who sell traded life policy investments.

The new code of practice will be provided to enhance the service offered by Independent Financial Advisers, focusing upon improving standards in a bid to answer concerns raised by the Financial Services Authority relating to the life policy asset class.

A move in America to ban life settlement securitisation is thought to have prompted the action, in addition to the FSA’s anxieties. The FSA have requested that there is better information made available in relation to the marketing of traded life policy investments, asking for improved warnings about potential risk within marketing literature.

ELSA’s chairman has issued a statement relating to the new process: "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."

"Only by creating this level of confidence in the market, can we expect to see investors acknowledge the very real diversification benefits offered by life settlements, and the capacity of these investments to provide a return that, if held to maturity, is typically shielded from the booms and busts of the conventional investment cycle."

It is thought that the new process will make life policies easier for customers to understand, supporting people in making an informed decision about the type of policy they purchase, and understanding the potential risks involved with certain life policy investments.