MFSA warns against ‘high-pressure sales tactics’ used to sell pension schemes

The Malta Financial Services Authority (MFSA) has warned against high-pressure sales tactics used in the promotion of pension schemes, as it launched a new consumer awareness campaign aimed at helping individuals better understand retirement products before entering into long-term financial commitments.

The initiative, titled “Know Before You Sign”, encourages consumers to carefully assess whether such products align with their personal financial circumstances, investment horizon, and risk tolerance.

According to the Authority, the campaign comes at a time when more consumers are being offered products linked to retirement planning and long-term savings. MFSA Head of Conduct Supervision and Malta’s Financial Literacy Ambassador, Sarah Pulis, said the initiative is intended to prompt individuals to “pause and reflect, ask questions, and make sure they fully understand what they are signing up for before making a commitment.”

As part of the campaign, the MFSA is urging consumers to evaluate several key aspects before taking up a retirement product. These include understanding how the product works, its objectives, and whether the investment is exposed to market fluctuations.

Consumers are also advised to assess applicable charges and fees, the duration of the commitment, and whether early exit is possible, including any associated penalties or restrictions. Flexibility is another important factor, particularly in terms of whether the product can adapt to changes in personal or financial circumstances.

The Authority is also drawing attention to potential red flags that consumers should not ignore. These include being pressured into signing quickly, receiving unclear or overly technical explanations, or not being provided with complete documentation.

Additionally, the MFSA cautions against products that emphasise potential benefits without offering a balanced explanation of the risks and long-term obligations involved.

Consumer rights and protections

The campaign also outlines key rights afforded to consumers when purchasing retirement products. These include the right to receive clear, fair, and non-misleading information, as well as access to essential documentation such as the Key Information Document (KID).

Consumers should also be given sufficient time to review the product before making a decision, with some products offering a cooling-off period after purchase.

The MFSA is also encouraging individuals to read all documentation carefully, seek clarification where necessary, and confirm that the provider is authorised and regulated. Seeking independent financial advice is also recommended where appropriate.