MFSA issues warning on financial giveaways

The Malta Financial Services Authority (MFSA) has issued a warning reminding regulated entities of their obligation towards consumers when marketing financial products or services through giveaways and rewards.

The regulatory body issued its position statement, advising regulated entities on what is acceptable and within which parameters these can be carried out, after it observed a recent upsurge in the number of such promotions.

The MFSA stated that linking any kind of reward to the acquisition of a financial service can encourage consumers to purchase products or services which are not required and/or do not meet their needs.

In order to make regulated entities aware of the MFSA’s expectations on transparent and fair marketing practices and consumer relations, the agency issued the following guidelines:

• Gifts can only be offered in cases where these are related to the product or service being offered and enhance the value thereof.
• Gifts cannot be of substantial value.
• Unsolicited calls to clients should be avoided and consumers should not be subject to undue pressure by the Regulated Persons’ representatives.
• Promotional materials should be reviewed before they are launched (ex-ante) by the respective Compliance Officers to ensure that they are compliant with the applicable rules.

The MFSA also reminded consumers of financial services to make sure that the financial product or service they would like to purchase fits their requirements.

“If in doubt, consumers can always seek financial advice from authorised financial intermediaries,” it said.

The authority also called on consumers to consider factors beyond instant rewards, such as a free gift or the possibility to participate in a lottery, when making purchasing decisions.