Back in December the Malta Financial Services Authority told the industry it was worried about pensions money being invested in “risky and highly illiquid” products without proper oversight.
In January the consultation on amendments to the pension rules issued under the Retirement Pensions Act closed and the resulting rules will come into effect in July.
In particular Malta will see:
- further oversight from pensions trustees;
- restrictions to structured notes;
- restrictions to those permitted to give advice;
- and a requirement that pension trustees check the fitness and propriety of investment advisers selected by clients.
Structured notes will not be allowed to be more than 30% of a member’s portfolio with a limit of 20% per issuer and those making investment selections to advisers will also have to be Mifid regulated or equivalent.
As a result of the changes one trust and pensions business has warned advisers, in a note seen by International Adviser, to be aware of a “major change in operation” and to expect more frequent requests for information.
It adds that trades will be rejected if there is insufficient information to confirm the investments fulfil their obligations.
Insurance regulated advisers
For insurance regulated advisers, pensions firms are expected take a grandfathering approach, which means those members will be able to continue to use their insurance regulated adviser for investment advice.
However, for clients introduced after the rules come into effect on 2nd July, advisers will either have to become Mifid regulated or have a regulated discretionary fund manager make the investment selections.
Bethell Codrington says:
I am not sure that an IMD passport or an Insurance license permits Investment Advice, so how can it be ‘grand-fathered’?
Maybe I am missing something in the Insurance Regulations that allows Investment Advice. Can someone point me in the right direction?
Alan Beaney says:
IMD allows those people that operate under it permission to advise on unit linked life policies and as a consequence the investments within them. This plains why so many QROPS are invested in insurance bonds when there is absolutely no need as the QROPS itself is a tax wrapper. No doubt many Maltese regulated IMD advisers will now move to Cyprus!!