The City watchdog plans to ban death bonds from being sold to British investors. The Financial Services Authority warned yesterday that traded life policy investments were "high risk, toxic products".
The bonds encourage investors to gamble on when a particular set of US citizens will die. But if the people live longer than expected, investors can lose out. Margaret Cole, the FSA's managing director, said: "The failure of these in the past has led to significant consumer detriment and new investors will suffer unless we take the necessary steps now."
The FSA will consult next year about banning the sale of the bonds but Ray Black, at the financial adviser Money-minder.com, warned that it was too late for many. "Anyone invested in these bonds should review their holdings quickly," he said. "Many may already find it difficult to get out without incurring significant losses, but unfortunately, holding on may just make matters worse."Reuse content