The UK’s pension transfer industry is seeking clarity and detail about new, apparently major rules affecting the way pensions transferred to Malta are soon to be required to be handled, it has emerged.
The new rules are understood to be expected to come into force on 2nd July – or just two months from the day after tomorrow – but as yet a final draft has yet to be released, according to sources in the Malta Financial Services Authority.
They are technically amendments to the MFSA’s existing Pension Rules, issued, the government says, “by the MFSA in terms of the Retirement Pensions Act”.
Thus far, the industry has been working from a lengthy, 56-page consultation document published on 6 December. The deadline for comments closed on 12 January, and currently, the MFSA is still evaluating the feedback, a spokesperson for the regulator told International Investment today.
“The consultation document is very comprehensive in the information provided and gives a step-by-step explanation as to the changes that are being proposed,” the spokesperson added.
The consultation document, entitled “Pension Rules for Personal Retirement Schemes Issued in Terms of the Retirement Pensions Act, 2011”, calls for greater oversight of pension trustees, with respect to the types of investments they are permitting pension schemes held on the island to contain, as well as a mandatory 30% restriction on the percentage of a scheme member’s portfolio that structured notes may contain.
In addition to the lengthy consultation document, there are five appendices.
Andrew Gardner, pensions administration director for STM Malta Trust & Co Management, the Malta-based arm of Gibraltar’s STM Group, noted that the Malta Association of Retirement Scheme Practitioners was among those which submitted responses, after consulting with its members, and that the industry “is hopeful that its suggestions in certain areas, particularly in respect of membership criteria for ‘member-directed schemes’ will be taken into account”.
“At this stage we have not seen amended proposals, but understand that the new regulations will be effective from 2nd July, as anticipated in the consultation document,” he added.
To read and download the consultation document, click here.
Global move towards greater regulation
In looking to boost the oversight of investment products marketed and administered on its shores, Malta is joining a growing number of jurisdictions around the world that have introduced new regulations in recent years. Many of these jurisdictions have done so in response to complaints from out-of-pocket investors.
As International Investment and other publications have been reporting for the last couple of weeks, Australia – which introduced a new regulatory regime in 2012 known as the Future of Financial Advice, that among other things created the concept of a “best interests duty” which mandates advisers place their clients’ interests first – has been the scene of a headline-grabbing royal commission investigation into its banks and financial services institutions since March. The investigation had been set up in response to pressure from whistle-blowers, consumer groups, individual investors and politicians, and since it began, has seen a steady stream of embarrassing revelations, amid talk of possible criminal charges being brought.
Stephen Sefton, a UK-based investor whose problems with a pension that ended up in a Malta trust, and who says he is still out-of-pocket more than £30,000, said he was “pleased to see” the proposed changes, some of which, as set out in the consultation document, he believes “address the things I had complained to the MFSA about last year”.
“I like to think that this shows that my efforts weren’t in vain,” added Sefton, whose case was publicised by a BBC radio report in January.
Sefton added that he hoped that the new regulations would be able to help “all those who already have had their pensions transferred into unsuitable, high-risk, unregulated funds by unregulated advisers, and in which investments they remain.”