Adverts for Financial Products & Services
OCTOBER 22, 2003

In recent weeks, there has been an increase in the number of advertisements in the local media promoting financial products and services. Some of these adverts have portrayed “headline” benefits, some of which guaranteeing returns of up to 5 or 6% whilst stating that capital is also guaranteed if held over the whole period of the product (such as five or seven years).

However, the Malta Financial Services Authority (MFSA) notes that some of the adverts highlight attractive percentage returns that appear to be annualised returns, when in fact they are not. It has been noticed, for example, that some returns being advertised are only guaranteed for the first year of the investment, with no indication of returns for the second and subsequent years. Other adverts, for example, explain that in order to guarantee the advertised return, the product issuer may have to redeem part of the capital, which in turn would result in an erosion of the invested capital.

Financial intermediaries are expected to promote their products in the best possible light. However, the corresponding advertising material should at all times be in line with the rules laid down by the MFSA. The Authority will continue to ensure that these rules are followed.

Consumers are however strongly advised to carefully read the detail of any advert which interests them and to ask for the full information (such asthe prospectus or other documentation) before making any investment decision. Consumers are also encouraged to read the MFSA’s free guide to better investing “Invest wisely! It’s your money!” which can be obtained from financial intermediaries or alternatively from the MFSA by phoning the MFSA’s Consumer Helpline on 800 74924.


Notes to editors:

  1. The responsibility for the contents of advertisements lies with the financial intermediary promoting the product. The MFSA has issued a detailed set of guidelines on the content of financial adverts. These require adverts promoting financial products to give a reasonably balanced picture of the product being advertised. This means that the main risks and qualifying conditions should be clearly pointed out.
  2. Although the MFSA does not screen adverts before they are published by financial intermediaries, it constantly monitors adverts in the media as well as other promotional material in circulation, to check that such advertising does not contain anything that is contrary to law or that might mislead investors..
  3. The attention of consumers is drawn to the fact that most financial adverts may contain smallprint at the bottom (or top) of the advert. This can be useful for including detailed information that consumers may be interested in, without cluttering up the appearance of an advert or obscuring the main message. Sometimes, however, smallprint contains important information about a product that one would not get from reading the main part of the advert. The danger is that consumers may be left with an unbalanced picture about the features and risks of the product being advertised if the smallprint is not read carefully.
  4. The MFSA has taken steps to check the practice of placing important information in smallprint and, where necessary, has required advertisers to amend or withdraw the adverts in question. The situation is being monitored on an ongoing basis.
  5. The MFSA is a public authority established by law to perform a number of functions in respect of financial services. The MFSA comprises several specialised units which together provide a structure for the licensing and supervision of persons and companies engaged in different financial services activities. Besides regulating, monitoring and supervising financial services in Malta, the MFSA also seeks to promote the general interests and legitimate expectations of consumers of financial services, and to promote fair competition practices and consumer choice in financial services