New Malta FSA Rules To Affect IFAs And Protect Investors

The new rules applying to sales of Malta-based QROPS investments are likely to negatively affect unscrupulous IFAs as they’re designed to enhance client protection.

Following a seemingly unending run of media reports identifying mis-selling and high commission-based scams by IFAs in expat retirement communities, it seems Malta is now biting the bullet and coming out in favour of consumer protection. Basically, the new rules impact a number of levels of the procedure by which Pension Trustees administer both existing members and new scheme applications.

After the new rules come into force, licensed IFAs giving advice to clients must also be specifically licensed to do so as well as being regulated in the client’s residential jurisdiction. As a result of the new laws, a good number of individual IFAs and companies providing the service may well be unable to comply with some or all of the stated requirements, thus disallowing them from continuing to serve their existing clients or approaching potential new clients. Larger firms may be able to comply, but one-man bands may well be forced to relocate or find expat-friendly locations with less stringent consumer protection laws.

Since the introduction of QROPS as a tax-friendly investment product for expats, it’s been a popular method for expat retirees to get their hands on at least a proportion of their pension savings. Larger financial advisory firms such as De Vere have poor reputations as regards the level of advice given as well as the dubious qualifications of their advisors, and advisors working independently but mostly on behalf of the offshore insurance sector will also find it tricky at best to comply. Expat investors need many more guarantees their money won’t be lost to commission-hungry, illegally-working IFAs and the product providers they support.