Following recent controversy over whether investments in life settlements policies are either ethical or fraught with unknown risks, the UK financial regulator is to deliver a key address at a London conference on the issue later this month.

To date, the Financial Services Authority has issued few public statements about life settlements investments, according to the European Life Settlements Association, a trade group. The FSA will speak at a London conference on 24 February to be hosted by ELSA and the US Life Insurance Settlement Association.

Life settlement securities are backed by life insurance policies that have been sold by their policyholders for cash to a financial institution. The institution aims to profit from the policy payout when the person whose life is assured dies. The sector, which originated in the US - still the largest market - has been driven by the desire of people such as the terminally ill to unlock the value of their policies when they can use the money. Investment firms operating in this sector say returns are steady and have low correlation with equity markets.

However, the sector has come in for criticism. The American Council of Life Insurers said securitisation of life settlement policies should be banned. “Securitisation of life insurance settlements exposes senior citizens and investors to increased risk of fraud and the practice should be prohibited by legislation or regulation," the group has said.

Peter Smith, the FSA’s head of investment policy, will speak at the conference in London.