by Structured Settlement Watchdog
A settlement planner, who is a member of NSSTA and a member of the Society of Settlement Planners, bought a factored structured settlement payment stream which bore a 10.76% effective discount rate at a time when market discount rates were possible at well below 10%. The seller DID NOT have independent professional advice according to the petition. The settlement planner was assigned the rights through a Florida structured settlement factoring intermediary which originated the deal in Broward County, where the deal and the name of the settlement planner are public record and were sourced online.
While the name of the broker/settlement planner is public record, I am going to proceed to an ethical discussion without it in the hope that a consensus can be developed about the right way and the wrong to buy structured settlement payment rights by settlement planners and structured settlement brokers.
- Structured settlement factoring is legal
- Buying factored structured settlement payment streams is legal
- Certain members of NSSTA and Society of Settlement Planners have and, upon information and belief, still buy structured settlement payment rights as investments for themselves and/or for clients.
- Other non members of NSSTA, who are appointed by NSSTA member life insurance companies directly, or though commonly owned or affiliated companies, buy structured settlement payment rights, or originate structured settlement factoring transactions. One has established what purports to be an "exchange"
- Many of the settlement planners claim to be tireless advocates for the claimant’s right to income tax free guaranteed periodic payments.
- It is commonly known to members of NSSTA and the Society of Settlement Planners, including the life insurers who appoint these individuals, that the structured settlement secondary market transactions are regulated, but, with the exception of a few states such as Maryland and Louisiana, there is no regulation of the participants and their sale practices.
It's also fair to say, that no member of either of those associations for more than 5 years can claim ignorance of the financial atrocities that certain members of the structured settlement secondary market have rained on former plaintiffs and recipients of structured settlement payments.
In addition to financial atrocities, certain members of the structured settlement secondary have decided to directly, or indirectly through paid sanctioned lead generation to educate, most often poorly and inaccurately, plaintiffs that are a source of business for members of NSSTA and Society of Settlement Planners. CBC Settlement Funding, and its "lead pimps "Annuity.org, structuredsettlements.com and nlrbfcu.org, generate an estimated 22 times the clicks that NSSTA generates for the key word "structured settlements". That's just one key word.
Ethical Considerations in the Purchase of Structured Settlement Payments from Former Plaintiffs by Structured Settlement Brokers and Settlement Planners
- Is it ethical for a settlement planner or structured settlement broker to buy structured settlement payment rights from a someone who has not received Independent Professional Advice?
- Is it ethical for a settlement planner or structured settlement broker, to buy structured settlement payment rights from a client for whom he or she placed the structured settlement annuity?
- Does funneling the structured settlement factoring transaction through a factoring company, change the answer?
- How does the answer change if the settlement planner is the only buyer?
- Is it ethical for a settlement planner or structured settlement broker to buy structured settlement payment rights from someone who has held their structured settlement less than 2 or 3 years?
- Is it ethical for a settlement planner or structured settlement broker to buy structured settlement payment rights from someone who has not got at least 3 competing quotes from unrelated entities?
- Does it matter, from an ethical standpoint, who originates the structured settlement factoring transaction from which the settlement planner or structured settlement broker is assigned the structured settlement payment rights as an investment? Should the nature of the structured settlement company/originator's business practices be an item for consideration on the proverbial theory that "if you lie down with dogs, you wake up with fleas"?
- Does it matter, from an ethical standpoint, who originates the structured settlement factoring transaction from which the settlement planner or structured settlement broker is assigned the structured settlement payment rights as an investment?
- If the settlement planner or structured settlement broker is buying structured settlement payment rights as an investment, for themselves or clients arising out of a structured settlement annuity that they placed, what if any disclosure obligations do they have with the annuity issuer with whom they are appointed?
- What are annuity issuers who appoint said settlement planners or structured settlement brokers doing to assure the privacy and confidentiality obligations to annuitants are maintained?
This important discussion will continue. My hope is that this blog post stimulates a wider industry discussion and that standards are set for the good of the industry and the people it serves.