MFSA Issues Guidelines on the Promotion of Financial Products via Giveaways

The Malta Financial Services Authority (MFSA) issued a notice targeting regulated entities under its jurisdiction on Friday, detailing a series of guidelines about Obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term to comply when promoting rewards and giveaways. According to the press release, the companies should meet these conditions when launching marketing campaigns of financial products or services.

“Linking any kind of reward to the Acquisition Acquisition Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There Read this Term of a financial service can encourage consumers to purchase products or services which are not required and/or do not meet their needs. Having observed a recent upsurge in the number of promotions entailing giveaways and rewards, the MFSA is stating its position on these promotional practices, advising regulated entities on what is acceptable and within which parameters this can be carried out,” the MFSA noted. Furthermore, the regulator said that gifts could only be offered in case where “these are related to the Product or Service being offered and enhance the value thereof.”

Also, these gifts cannot be of 'substantial' value, although it did not clarify a threshold that the value should not cross. “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 regulator added.

Considering Factors beyond How Attractive a Gift Is

In the notice, the MFSA warns investors that they should make sure that all giveaways and gifts should comply with these requirements, and not only consider the fact of attractive offers like the ones that offer free gifts or the possibility to participate in a lottery before investing in a financial product.

Recently, the MFSA Board of Governors announced that it had secured Joseph Gavin as its new Chief Executive Officer, effective from September 2021.