The Malta Financial Services Authority (MFSA) has launched a consumer education programme to provide savers with “essential information” before investing in insurance-based investment products (Ibips).
Ibips are products made up of an insurance and investment component, meaning that clients will buy a life policy with part of their premium being invested in financial markets.
But the MFSA believes consumers “need to have a heightened awareness of the risks involved” since these products are a lot more complex than others.
As a result, the Maltese regulator has produced a series of videos available on its website and social media to introduce consumers to the different types of Ibips as well as what they can do to take informed decisions, including checking key information documents (Kids).
Kids must be made available by service providers to all prospective investors, which will allow consumers to compare products based on their suitability, risk, premium payments and recommended holding periods – usually 10 to 15 years for Ibips.
Challenges
Sarah Pulis, the MFSA’s deputy head of conduct supervision, said: “Insurance-based investment products have become widely popular in the market, and as a regulator we understand that consumers might find it challenging to understand the risks and opportunities tied to them.
“The product providers that manufacture these products are required by our regulations to ensure that these are manufactured taking into account the needs objectives and characteristics of their target markets”.
The regulator said the campaign is part of a series of similar initiatives aimed at raising the public’s awareness and safeguard the interests of consumers so that they can be better informed when taking decisions about their finances.
