The Pension Rules for Personal Retirement Schemes came into effect in Malta on 1 July 2019, meaning that advisers working with clients based on the island must be regulated in the jurisdiction.
This means that any retiree who has transferred their UK pension into a qualifying recognised overseas pension scheme (Qrops) in Malta has to make sure that their adviser is able to keep serving them.
The rules were implemented by the Malta Financial Services Authority (MFSA) in January 2019, but advisers were granted a six-month transition period.
Client protection
Jason Porter, director of specialist expat advisory firm Blevins Franks, told International Adviser: “These new rules should be welcomed – they will give the client greater local protection in respect of the pension advice they receive, and potentially reduce the risk around the investments their pension scheme may hold.
That is something the STM Group in Malta have also agreed on. Deborah Schembri, managing director of STM Malta, commented: “We see the new regime as a positive step. The new regulations enhance consumer protection and therefore should make Malta the jurisdiction of choice.”
Porter added: “For Blevins Franks, it is very much business as usual, as we are regulated in the seven countries we have a presence. We also work with investment managers who have a relatively conservative approach and style, so you will not have found investments like structured products in our client portfolios or pension schemes even before these rule changes were introduced.”
Requirements
Advisers will also need to be able to provide investment advice to the pension scheme member, which will then be monitored by the scheme’s administrator.
This follows the MFSA introducing a diversification requirement, which needs to be in place before the advice is given.
Failure to comply
The changes will apply to people trying to open a pension scheme, as well as to existing members of a Qrops.
The MFSA also said that the six-month transitional period was given in order for scheme members to check if their advisers would be able to operate in Malta from 1 July 2019.
If it was not the case, the client then had the chance to find a different financial adviser that met the standards.
Failure to ensure their existing adviser is compliant could leave a lot of clients orphaned and unable to receive financial advice.
It will only become clear in time if there is a sufficient number of advisers in Malta for those orphaned clients to turn to.
