Home Loan (Amendment) Regulations, 2016

L.N. 259 of 2016

CONSUMER AFFAIRS ACT

(CAP. 378)

Home Loan (Amendment) Regulations, 2016

IN exercise of the powers conferred upon him by article 7 of the

Consumer Affairs Act, the Minister for Social Dialogue, Consumer

Affairs and Civil Liberties, after consultation with the Consumer

Affairs Council, and on the advice of the Malta Financial Services

Authority, has made the following regulations:-

The title of these regulations is the Home Loan Citation.

(Amendment) Regulations, 2016, and these regulations shall be read

and construed as one with the Home Loan Regulations, hereinafter S.L. 378.10.

referred to as "the principal regulations".

Regulation 1 of the principal regulations shall be Substitutes

regulation 1 of

substituted by the following

the principal

regulations.

" Citation and

1. (1)

The title of these regulations

purpose.

is Credit Agreements for Consumers relating to

Residential Immovable Property Regulations.

(2) The purpose of these Regulations is

to implement Directive 2014/17/EU of the

European Parliament and of the Council of 4

February 2014 on credit agreements for

consumers relating to residential immovable

property and amending Directives 2008/48/EC

and 2013/36/EU and Regulation (EU) No 1093/

2010. (3) These regulations lay down a

common framework for certain aspects of laws,

regulations and administrative provisions

concerning credit agreements, including an

obligation to carry out a creditworthiness

assessment before granting credit, as a basis for

the development of effective underwriting

standards in relation to residential immovable

property, and for certain prudential and

supervisory requirements, including for the

establishment and supervision of credit

intermediaries.".

Regulation 2 of the principal regulations shall be amended Amends

regulation 2 of

as follows

the principal

regulations.

(a)

immediately after the definition "advertisement"

there shall be added the following new definition

" "advisory services" means the provision of

personal recommendations to a consumer in respect of one

or more transactions relating to credit agreements and

constitutes a separate activity from the granting a credit

and from the credit intermediation activities in terms of the

definition "credit intermediary";

(b)

the definition "ancillary

service"

shall

be

substituted by the following

" "ancillary service" means a service offered to the

consumer in conjunction with the credit agreement;";

(c)

the definition "annual percentage rate of charge"

shall be substituted by the following

" "annual percentage rate of charge" or "APRC"

means the total cost of the credit to the consumer,

expressed as an annual percentage of the total amount of

the credit, where applicable, including the costs referred to

in regulation 21(2) and equates, on an annual basis, to the

present value of all future or existing commitments

(drawdowns, repayments and charges) agreed by the

creditor and the consumer;";

(d)

immediately after the definition "annual percentage

rate of charge" there shall be added the following new

definition

" "appointed representative" means a natural or

legal person who performs activities in terms of the

definition "credit intermediary" that is acting on behalf of

and under the full and unconditional responsibility of only

one credit intermediary;";

(e)

immediately after the definition "borrowing rate"

there shall be added the following new definition

" "bundling practice" means the offering or the

selling of a credit agreement in a package with other

distinct financial products or services where the credit

agreement is also made available to the consumer

separately but not necessarily on the same terms or

conditions as when offered bundled with the ancillary

services;";

(f)

immediately after the new definition "bundling

practice" there shall be added the following new definition

" "competent authorities" means the MFSA and the

Director General;";

(g)

immediately after the definition "consumer" there

shall be added the following new definition

" "contingent liability or guarantee" means a credit

agreement which acts as a guarantee to another separate

but ancillary transaction, and where the capital secured

against an immovable property is only drawn down if an

event or events specified in the contract occur;";

(h)

immediately after the new definition "contingent

liability or guarantee" there shall be added the following new

definition

" "CRD" means Directive 2013/36/EU of the

European Parliament and of the Council of 26 June 2013

on the access to the activity of credit institutions and the

prudential supervision of credit institutions and investment

firms, amending Directive 2002/ 87/EC and repealing

Directives 2006/48/EC and 2006/49/EC, as amended from

time to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards, guidelines and similar measures that have been

or may be issued thereunder;";

(i)

immediately after the new definition "CRD" there

shall be added the following new definition

" "credit" means a credit falling within the scope of

these regulations in accordance with regulation 3;";

(j)

the definition "creditor" shall be substituted by the

following

" "creditor" means a natural or legal person who,

duly authorised, grants or promises to grant credit in the

course of his trade, business or profession;";

(k)

immediately after the definition "creditor" there

shall be added the following new definition

" "credit agreement" means an agreement whereby

a creditor, grants or promises to grant, to a consumer,

credit in the form of a deferred payment or other similar

financial arrangement, and shall be distinct from the public

deed of loan;";

(l)

immediately after the new definition "credit

agreement" there shall be added the following new definition

" "Credit Intermediaries’ Rule" means a rule issued

by the MFSA in terms of these regulations;";

(m)

the definition "credit Intermediary" shall be

substituted by the following

" "credit intermediary" means a natural or legal

person who is not acting as a creditor or Notary Public and

not merely introducing, either directly or indirectly, a

consumer to a creditor or credit intermediary, and who, in

the course of his trade, business or profession, for

remuneration, which may take a pecuniary form or any

other agreed form of financial consideration

(a) presents or offers credit agreements to

consumers;

(b) assists consumers by undertaking

preparatory work or other pre-contractual

administration in respect of credit agreements other

than as referred to in paragraph (a); or

(c) concludes credit agreements

with

consumers on behalf of the creditor;";

(n)

the definition "creditworthiness assessment" shall

be substituted by the following

" "creditworthiness assessment" means the

evaluation of the prospect for the debt obligation resulting

from the credit agreement to be met;";

(o)

immediately after the definition "creditworthiness

assessment" there shall be added the following new definition

" "Data Protection Directive" means Directive 95/

46/EC of the European Parliament and of the Council of 24

October 1995 on the protection of individuals with regard

to the processing of personal data and on the free

movement of such data, as may be amended from time to

time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards, guidelines and similar measures that have been

or may be issued thereunder;";

(p)

immediately after the new definition "Data

Protection Directive" there shall be added the following new

definition

" "Directive 2005/29/EC" means Directive 2005/

29/EC of the European Parliament and of the Council of 11

May 2005 concerning unfair business-to-consumer

commercial practices in the internal market and amending

Council Directive 84/450/EEC, Directive 97/7/EC, 98/27/

EC and 2002/65/EC of the European Parliament and of the

Council and Regulation (EC) No 2006/2004 of the

European Parliament and of the Council, as amended from

time to time;";

(q)

immediately after the definition "durable medium"

there shall be added the following new definition

" "EBA" means the European Banking Authority

established by Regulation (EU) No 1093/2010;";

(r)

immediately after the new definition "EBA" there

shall be added the following new definition

" "ESIS" means the European Standardised

Information Sheet set out in the First Schedule;";

(s)

immediately after the new definition "ESIS" there

shall be added the following new definition

" "European credit intermediary" means a credit

intermediary admitted in another Member State in terms of

the MCD;";

(t)

immediately after the new definition "European

credit intermediary" there shall be added the following new

definition

" "European creditor" means a credit institution

which is authorised in another Member State in terms of

the CRD and which has exercised its right to establish a

branch or to provide services in Malta in terms of the

CRD;";

(u)

immediately after the new definition "European

creditor" there shall be added the following new definition

" "European regulatory authority" means a body

which is in a country or territory outside Malta that is a

Member State and is empowered by its national law or

regulation, or by public authorities in the Member State

concerned expressly empowered for that purpose by

national law, to ensure the application and enforcement of

the MCD

Provided that where there is more than one

European regulatory authority in a Member State, the

European regulatory authority for the purposes of these

regulations shall be the European regulatory authority

which has been designated by the Member State concerned

as the single contact point for the purposes of the MCD in

accordance with Article 36(1) of the MCD;";

(v)

immediately after the new definition "European

regulatory authority" there shall be added the following new

definition

" "financial institution" means a

financial institution as defined in regulation

2(1) of the Financial Institutions Act;";

(w)

immediately after the new definition "financial

institution" there shall be added the following new definition

" "Financial Services Tribunal" means

the Financial Services Tribunal established

under the Malta Financial Services Authority

Act;";

(x)

immediately after the definition "fixed borrowing

rate" there shall be added the following new definition

" "foreign currency loan" means a credit agreement

where the credit is

(a) denominated in a currency other than

that in which the consumer receives the income or

holds the assets from which the credit is to be

repaid; or

(b) denominated in a currency other than

that of the Member State in which the consumer is

resident;";

(y)

the definition "home loan agreement" shall be

(z)

immediately after the new definition "foreign

currency loan" there shall be added the following new

" "group" means a group of creditors which are to

be consolidated for the purposes of drawing up

consolidated accounts, as defined in Directive 2013/34/EU

of the European Parliament and of the Council of 26 June

2013 on the annual financial statements, consolidated

financial statements and related reports of certain types of

undertakings, as may be amended from time to time;";

(aa) immediately after the definition "home loan

agreement" there shall be added the following new definition

" "home Member State" means

(a) where

the

creditor

or

credit

intermediary is a natural person, the Member State

in which his head office is situated;

(b) where

the

creditor

or

credit

intermediary is a legal person, the Member State in

which its registered office is situated or, if under its

national law it has no registered office, the Member

State in which its head office is situated;";

(ab) immediately after the new definition "home

Member State" there shall be added the following new

" "host Member State" means the Member State,

other than the home Member State, in which the creditor or

credit intermediary has a branch or provides services;";

(ac) immediately after the new definition "host Member

State" there shall be added the following new definition

" "Maltese credit intermediary" means a credit

intermediary who is admitted in terms of these

regulations;";

(ad) immediately after the new definition "Maltese

credit intermediary" there shall be added the following new

definition

" "Maltese creditor" means a credit

institution which is licensed in terms of the

Banking Act and, or, a financial institution

which is licensed in terms of the Financial

Institutions Act to carry out lending;";

(ae) immediately after the new definition "Maltese

creditor" there shall be added the following new definition

" "MCD" means Directive 2014/17/EU of the

European Parliament and of the Council of 4 February

2014 on credit agreements for consumers relating to

residential immovable property and amending Directives

2008/48/EC and 2013/36/EU and Regulation (EU) No

1093/2010, as amended from time to time, and includes

any implementing measures, implementing technical

standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued

thereunder;";

(af)

immediately after the definition "Member State"

there shall be added the following new definition

" "MFSA" means the Malta Financial

Services Authority established by the Malta

Financial Services Authority Act;";

(ag) immediately after the new definition "MFSA"

there shall be added the following new definition

" "non-credit institution" means any creditor that is

not a credit institution;";

(ah) immediately after the new definition "non-credit

institution" there shall be added the following new definition

" "Notary Public" has the same meaning

assigned to it under article 2(1) of the Notarial

Profession and Notarial Archives Act;";

(ai)

the definition "public deed of loan" shall be

substituted by the following

" "public deed of loan" means the legal instrument

signed before a Notary Public as part of the security

required by the creditor in the credit agreement;";

(aj)

immediately after the definition "public deed of

loan" there shall be added the following new definition

" "Regulation (EU) No. 1093/2010" means

Regulation (EU) No. 1093/2010 of the European

Parliament and of the Council of 24 November 2010

establishing a European Supervisory Authority (European

Banking Authority), amending Decision No. 716/2009/EC

and repealing Commission Decision 2009/78/EC, as

amended from time to time, and includes any

implementing

measures,

implementing

technical

standards, regulatory technical standards, guidelines and

similar measures that have been or may be issued

thereunder;";

(ak) immediately after the new definition "Regulation

(EU) No. 1093/2010" there shall be added the following new

definition

" "shared equity credit agreement" means a credit

agreement where the capital repayable is based on a

contractually set percentage of the value of the immovable

property at the time of the capital repayment or

repayments;";

(al)

immediately after the new definition "shared equity

credit agreement" there shall be added the following new

definition

" "staff" means

(a) any natural person working for the

creditor, or credit intermediary who is directly

engaged in the activities covered by these

regulations or who has contacts with consumers in

the course of activities covered by these

regulations;

(b) any natural person directly managing or

supervising the natural persons referred to in

paragraph (a);";

(am)

immediately after the new definition "staff" there

shall be added the following new definition

" "tied credit intermediary" means any credit

intermediary who acts on behalf of and under the full and

unconditional responsibility of

(a)

only one creditor;

(b)

only one group; or

(c) a number of creditors or groups which

does not represent the majority of the market;";

(an) immediately after the new definition "tied credit

intermediary" there shall be added the following new

definition

" "third country" means a country that is not a

Member State;";

(ao) the definition "total amount payable by the

consumer" shall be substituted by the following

" "total amount payable to the consumer" means

the sum of the total amount of the credit and the total cost

of such credit to the consumer;";

(ap) the definition "total cost of the credit to the

consumer" shall be substituted by the following

" "total cost of the credit to the consumer" means

all the costs, including interest, commissions, taxes and

any other kind of fees and, or charge howsoever described,

or to whomsoever it is paid, which the consumer is

required to pay in connection with the credit agreement

and which are known to the creditor, including the cost of

valuation of property where such valuation is necessary to

obtain the credit, but excluding

(a) notarial fees;

(b) Public Registry and Land Registry fees;

(c) costs relating to searches regarding title;

(d) costs related to property valuation, unless

such valuation is required by the creditor;

(e) costs associated with the provision of

security;

(f) stamp duties;

(g) any other fees ancillary to the publication

of the public deed of loan;

(h) any other registration fees for the transfer

of ownership of the immovable property; and

(i) any charges payable by the consumer for

non-compliance with the commitments laid down

in the credit agreement

Provided that costs in respect of ancillary

services relating to the credit agreement, in particular

insurance premiums, are also included if, in addition, the

conclusion of a service contract is compulsory in order to

obtain the creditor to obtain such credit on the terms and

conditions marketed;"; and

(aq) immediately after the definition "total cost of the

credit to the consumer" there shall be added the following new

definition

" "tying practice" means the offering or the selling

of a credit agreement in a package with other distinct

financial products or services where the credit agreement

is not made available to the consumer separately.".

Regulation 3 of the principal regulations shall be Substitutes

regulation 3 of

substituted by the following

the principal

regulations.

"3. (1) These regulations shall apply to

(a) credit agreements which are secured by a

hypothec or privilege on residential immovable property or

secured by a right related to residential immovable

property; and

(b) credit agreements the purpose of which is to

acquire or retain property rights in land or in an existing or

projected building.

(2) These regulations shall not apply to

(a)

equity release credit agreements where the

creditor

(i) contributes a lump sum, periodic

payments or other forms of credit disbursement in

return for a sum deriving from the future sale of a

residential immovable property or a right relating

to residential immovable property; and

(ii) will not seek repayment of the credit

until the occurrence of one or more specified life

events of the consumer as may be defined by the

competent authorities, unless the consumer

breaches his contractual obligations which allows

the creditor to terminate the credit agreement;

(b) credit agreements where the credit is granted

by an employer to his employees as a secondary activity

where such a credit agreement is offered free of interest or

at an APRC lower than those prevailing on the market and

not offered to the public generally;

(c) credit agreements where the credit is granted

free of interest and without any other charges except those

that recover costs directly related to the securing of the

credit;

(d) credit agreements in the form of an overdraft

facility and where the credit has to be repaid within one

month;

(e) credit agreements which are the outcome of a

settlement reached in court or before another statutory

authority;

(f) credit agreements which relate to the deferred

payment, free of charge, of an existing debt and which do

not fall within the scope of sub-regulation (1)(a).".

For the words "Part IV" in the heading immediately

before regulation 4 of the principal regulations there shall be

substituted the words "Part VI".

Immediately after regulation 3 of the principal regulations,

there shall be added the following new Part and new regulations

"PART IV - Competent Authorities

3A. (1)

The competent authorities for the

purposes of these regulations shall be the MFSA and

the Director General

Provided that the single contact point for

the purposes of the provisions of these regulations

transposing the MCD, and to receive requests for

exchange of information or cooperation pursuant to

Article 36(1) of the MCD shall be the MFSA.

(2) The MFSA and the Director General

shall, for the purposes of ensuring the application

and enforcement of these regulations

(a)

cooperate with one another

whenever necessary in order to carry out their

duties under these regulations, including for the

purposes of cooperating with the EBA as

required under these regulations; and

(b)

collaborate closely in order to

discharge their respective duties effectively.

(3) The competent authorities, all persons

who work or who have worked for the competent

authorities, as well as auditors and experts instructed

by the competent authorities, shall be bound by the

obligation of professional secrecy.

(4) Without prejudice to the cases covered by

criminal law or by these regulations, the competent

authorities, all persons who work or who have

worked for the competent authorities, as well as

auditors and experts instructed by the competent

authorities shall, unless such information is in

summary or aggregate form, not divulge any

confidential information which they may receive in

the course of their duties to any person or authority

whatsoever

Provided that this sub-regulation shall not

prevent the competent authorities from exchanging

or transmitting confidential information in

accordance with national and European Union law.

(5) The MFSA shall inform the European

Commission and the EBA of the designation of the

MFSA and the Director General, in terms of Article

5(4) of the MCD, and any changes thereto, indicating

any division of the respective duties between the

MFSA and the Director General

Provided that such notification shall be

made as soon as possible and at the latest on the

coming into force of these regulations.

(6) The competent authorities shall exercise

their powers directly in conformity with national law.

3B. (1)

It shall be the duty of the MFSA to

carry out the functions and duties prescribed by these

regulations and any Credit Intermediaries’ Rules

issued thereunder and to ensure that creditors and

credit intermediaries carrying out their activities in

Malta comply with these regulations and any

directives and Credit Intermediaries’ Rules made or

issued thereunder, and with the conditions of their

admission

Provided that in pursuance of that duty

the MFSA shall at all times afford such co-operation

to the Director General, as the Director General may

require in the discharge of its duties.

(2) The MFSA shall monitor the activities of

creditors and credit intermediaries so as to assess

compliance with the requirements of these

regulations and any Credit Intermediaries’ Rules

issued thereunder.

(3) The

MFSA

may

issue

Credit

Intermediaries’ Rules in order to better carry out and

to better implement the provisions of these

regulations and for the purpose of implementing any

guidelines, recommendations and decisions issued

by the EBA in terms of Regulation (EU) No. 1093/

2010. (4) Credit Intermediaries’ Rules shall be

binding on credit intermediaries and others as may

be specified therein.

(5) Credit Intermediaries’ Rules and any

amendment or revocation thereof shall be officially

communicated to credit intermediaries and the

MFSA shall make copies thereof available to the

public.

(6) Without prejudice to any of the powers

conferred by these regulations, the MFSA may,

whenever it deems necessary, give, by notice in

writing, such directives as it may deem appropriate

in the circumstances in order to carry out the

functions and duties prescribed by these regulations

or any Credit Intermediaries’ Rules issued

thereunder

Provided that the power to give directives

under this sub-regulation shall include the power to

vary, alter, add to or withdraw any directive, as well

as the power to issue new or further directives.

(7) Any person to whom a notice is given in

accordance with sub-regulation (6) shall obey,

comply with and otherwise give effect to any such

directive within the time and in the manner stated in

the directive.

(8) Where the MFSA is satisfied that the

circumstances so warrant, it may at any time make

public any directive it has given under the provisions

of this regulation.

(9) In the event of reasonable doubt as to

whether credit intermediation activities in terms of

the definition "credit intermediary" in regulation 2

are or are not being transacted in or from Malta by

any person, the matter shall be conclusively

determined by the MFSA.".

Immediately after regulation 3B of the principal Adds new Part

regulations, there shall be added the following new Part and new and

"PART V - Financial Education of Consumers

3C. (1)

The MFSA shall promote

measures that support the education of consumers in

relation to responsible borrowing and debt

management, in particular in relation to credit

agreements.

(2) The MFSA shall provide clear and

general information to consumers on the credit

granting process in relation to credit, in order to

guide consumers, especially those entering into a

credit agreement for the first time.

(3) In order to carry out the obligation

prescribed in sub-regulation (2), the MFSA may

request the assistance of creditors and credit

intermediaries, in writing, who shall assist and

provide the MFSA in a timely manner, with any

information which the MFSA may require.

(4) The MFSA may also request creditors

and credit intermediaries, in writing, to provide clear

and general information to consumers on the credit

granting process in relation to credit, in order to

guide consumers, especially those entering into a

credit agreement for the first time.

(5) Any information provided to consumers

by the MFSA in accordance with sub-regulation (2)

and any information which creditors and credit

intermediaries are required to provide to consumers

in accordance with sub-regulation (4) shall be made

publicly available.

(6) The MFSA shall also disseminate

information to consumers regarding the guidance

which may be published from time to time by the

MFSA and, or, by creditors and credit intermediaries

in accordance with sub-regulation (5), as well as

regarding any guidance on the credit granting

process in relation to credit, which may be provided

to consumers by the Director General and by

consumer organisations from time to time.".

Regulation 4 of the principal regulations shall be

substituted by the following

4. (1)

A creditor

and

a

credit

intermediary shall take all necessary steps to ensure

full compliance with these regulations.

(2) A credit intermediary shall

(a)

indicate in advertising and

documentation intended for consumers, the

extent of his powers, in particular whether he is

a tied credit intermediary, and in such case,

whether he acts on behalf of and under the full

and unconditional responsibility of only one

creditor, only one group, or a number of

creditors or groups which does not represent

the majority of the market;

(b)

disclose the fee, if any, payable by

the consumer for his services, which fee shall

be agreed in writing or on a durable medium

between the consumer and the credit

intermediary before the conclusion of the credit

agreement; and

(c)

disclose the fee, if any, payable by

the consumer to the credit intermediary for his

services to the creditor for the purpose of

calculating the annual percentage rate of

charge.".

Immediately after regulation 4 of the principal regulations Adds new

there shall be added the following new regulation

4A. When information is provided to

consumers in compliance with the requirements set

out in these regulations, such information shall be

provided without charge to the consumer.".

Regulation 5 of the principal regulations shall be Substitutes

substituted by the following

5. (1)

When

manufacturing

credit

products falling within the scope of these regulations

in accordance with regulation 3, or granting,

intermediating or providing advisory services on

credit and, where appropriate, ancillary services to

consumers or when executing a credit agreement, the

creditor and, or the credit intermediary shall act

honestly, fairly, transparently and professionally,

taking account of the rights and interests of the

consumers

Provided that in relation to the granting,

intermediating or provision of advisory services on

credit and, where appropriate, of ancillary services,

the activities shall be based on information about the

consumer’s circumstances and any specific

requirement made known by a consumer and on

reasonable assumptions about risks to the

consumer’s situation over the term of the credit

agreement

Provided further that in relation to such

provision of advisory services, the activity shall in

addition be based on the information required under

regulation 8B(3)(a).

(2) Creditors and credit intermediaries shall

ensure that the manner in which their staff and the

relevant credit intermediaries are remunerated does

not impede compliance with the obligation to act in

accordance with the obligation set out in sub-

regulation (1).

(3) When

establishing

and

applying

remuneration policies for staff responsible for the

assessment of creditworthiness, creditors shall

comply with the following principles in a way and to

the extent that is appropriate to their size, internal

organisation and the nature, scope and complexity of

their activities

(a)

the remuneration policy is

consistent with and promotes sound and

effective risk management and does not

encourage risk-taking that exceeds the level of

tolerated risk of the creditor;

(b)

the remuneration policy is in line

with the business strategy, objectives, values

and long-term interests of the creditor, and

incorporates measures to avoid conflicts of

interest, in particular by providing that

remuneration is not contingent on the number

or proportion of applications accepted;

(4) Creditors and credit intermediaries

providing advisory services shall ensure that the

remuneration structure of the staff involved does not

prejudice their ability to act in the consumer’s best

interest and in particular is not contingent on sales

targets.".

Regulation 6 of the principal regulations shall be

substituted by the following

" Knowledge

6. (1)

Creditors

and

credit

intermediaries shall require their staff to possess and

to keep up-to-date an appropriate level of knowledge

requirements

and competence in relation to the manufacturing, the

offering or granting of credit agreements, the

carrying out of credit intermediation activities in

terms of the definition "credit intermediary" in

regulation 2, or the provision of advisory services.

(2) Where the conclusion of a credit

agreement includes an ancillary service, creditors

and credit intermediaries shall also require their staff

to possess and to keep up-to-date an appropriate

level of knowledge and competence in relation to

that ancillary service.

(3) Where Malta is the home Member State,

the MFSA shall be responsible for establishing the

minimum knowledge and competence requirements

for staff of Maltese creditors and of Maltese credit

intermediaries, in accordance with the principles set

out in the Third Schedule

Provided that where a Maltese creditor,

or a Maltese credit intermediary, provides its

services within the territory of one or more other

Member States through the establishment of a

branch, the authority responsible for establishing the

minimum knowledge and competence requirements

applicable to the staff of such branch, shall, in

accordance with paragraph (i) of Article 9(3) of the

MCD, be the European regulatory authority of the

host Member State

Provided further that where a Maltese

creditor, or a Maltese credit intermediary, provides

its services within the territory of one or more other

Member States under the freedom to provide

services, the European regulatory authority of the

host Member State may, in accordance with

paragraph (ii) of Article 9(3) of the MCD, establish

the minimum knowledge and competence

requirements referred to in paragraph 1(b), (c), (e)

and (f) of the Third Schedule.

(4) Where Malta is the host Member State,

and a European creditor or a European credit

intermediary provides its services within the

territory of Malta

(a)

through the establishment of a

branch, the MFSA shall be responsible for

establishing the minimum knowledge and

competence requirements applicable to the

staff of such a branch in accordance with the

Third Schedule;

(b)

under the freedom to provide

services, the MFSA may establish the

minimum knowledge and competence

requirements for those requirements referred to

in paragraph 1(b), (c), (e) and (f) of the Third

Schedule.

(5) The MFSA shall supervise creditors and

credit intermediaries authorised to provide their

services in Malta in order to ensure compliance with

the requirements of sub-regulations (1) to (4)

Provided that for the purposes of this

sub-regulation, the MFSA shall have the power to

require such creditors and credit intermediaries to

provide such evidence as the MFSA may deem

necessary.

(6) Where Malta is the home Member State,

for the effective supervision of Maltese creditors and

Maltese credit intermediaries providing their

services within the territory of other Member States

under the freedom to provide services, the MFSA

shall cooperate closely with the European regulatory

authority of the host Member State for the effective

supervision and the enforcement of the minimum

knowledge and competence requirements of the host

Member State.

(7) Where Malta is the host Member State,

for the effective supervision of European creditors

and European credit intermediaries providing their

services in Malta under the freedom to provide

services, the MFSA shall cooperate closely with the

European regulatory authority of the home Member

State for the effective supervision and enforcement

of the minimum knowledge and competence

requirements established under these regulations and

any Credit Intermediaries’ Rules issued thereunder.

(8) For the purposes of sub-regulations (6)

and (7), the MFSA may, in accordance with Article

9(5) of the MCD

(a)

delegate tasks and responsibilities

to the European regulatory authorities of other

Member States;

(b)

be

delegated

tasks

and

responsibilities by European regulatory

authorities of other Member States.

(9) The MFSA may issue, amend or revoke

Credit Intermediaries’ Rules as it shall consider

appropriate for carrying into effect the provisions of

this regulation and of the Third Schedule.

(10) Any criteria established by the MFSA in

order for credit intermediaries’ or creditors’ staff to

meet their professional requirements shall be made

public.".

Immediately before regulation 7 of the principal Adds new

heading to the

regulations there shall be added the following new heading

principal

regulations.

"PART VII - Information and practices preliminary to the

conclusion of the credit agreement".

Regulation 7 of the principal regulations shall be Substitutes

regulation 7 of

substituted by the following

the principal

regulations.

7. (1)

The

creditor

and,

where

applicable, the credit intermediary, shall provide the

consumer with the personalised information needed

to compare the credits available on the market,

assess their implications and make an informed

decision on whether to conclude a credit agreement

(a)

without undue delay after the

consumer has given the necessary information

on his needs, financial situation and

preferences in accordance with regulation 12;

(b)

in good time before the consumer

is bound by any credit agreement or offer; and

(c)

on paper or on another durable

medium.

(2) The personalised information referred to

in sub-regulation (1) shall be provided by means of

the ESIS, as set out in the First Schedule

Provided that for the purposes of sub-

regulation (2) the creditor and, where applicable, the

credit intermediary, may, up to 21 March 2019,

continue to use the ESIS applicable prior to the entry

into force of this regulation.

(3) Creditors and, where applicable, credit

intermediaries, shall provide the ESIS to the

consumer before the provision of an offer binding on

the creditor

Provided that when an offer binding on

the creditor is provided to the consumer, it shall be

provided on paper or on another durable medium

and, where characteristics of the offer are different

from the information contained in the ESIS

previously provided in accordance with this sub-

regulation, it shall be accompanied by an updated

ESIS.

(4) The consumer shall be entitled to a full

seven (7) day period, in order to ensure that

sufficient time to compare offers, assess their

implications and make an informed decision, is

allowed to the consumer

Provided that the time period referred to

in this sub-regulation shall be a reflection period

before the conclusion of the credit agreement

Provided further that the reflection

period specified in this sub-regulation shall

(a)

be binding on the creditor for the

duration of the reflection period; and

(b)

allow that the consumer may

accept the offer at any time during the

reflection period.

(5) The creditor and, where applicable, the

credit intermediary who has supplied the ESIS to the

consumer shall be deemed to have fulfilled the

requirements regarding information provision to the

consumer prior to the conclusion of a distance

contract as laid down in regulation 5 of the Distance

Selling (Retail Financial Services) Regulations and

shall be deemed to satisfy the requirements of

regulation 6(1) of the Distance Selling (Retail

Financial Services) Regulations only where they

have at least supplied the ESIS prior to the

conclusion of the contract.

(6) The ESIS model set out in the First

Schedule shall not be modified

Provided that where the creditor or,

where applicable, the credit intermediary, wishes to

provide to the consumer any additional information,

and, or where the creditor, or where applicable the

credit intermediary, is required by national law to

provide to the consumer any additional information,

such additional information shall be given in a

separate document which may be annexed to the

ESIS.

(7) In

case

of

voice

telephony

communications, as referred to in regulation 5(3) of

the Distance Selling (Retail Financial Services)

Regulations, the description of the main

characteristics of the financial service to be provided

in accordance with sub-paragraph (ii) of the proviso

to sub-regulation (3)(a) of regulation 5 of the

Distance Selling (Retail Financial Services)

Regulations, shall include at least the items referred

to in sections 3 to 6 of Part A of the First Schedule.

(8) The creditor or, where applicable, the

credit intermediary shall, at the time of the provision

of an offer binding on the creditor, provide the

consumer with a copy of the draft conditions to be

eventually entered into the credit agreement.".

Immediately after regulation 7 of the principal regulations Adds new

regulation to the

there shall be added the following new regulation

principal

regulations.

7A. (1)

Creditors and, where applicable,

credit intermediaries shall provide adequate

explanations to the consumer on the proposed credit

agreement and any ancillary services, in order to

place the consumer in a position enabling him to

assess whether the proposed credit agreement and

ancillary services are adapted to his needs and

financial situation.

(2) The adequate explanations referred to in

sub-regulation (1) shall, where applicable, include in

particular

(a)

an explanation of the information

and terms included in the pre-contractual

information to be provided in accordance with

regulation 9 in the case of creditors and

regulations 9 and 10 in the case of credit

intermediaries;

(b)

the essential characteristics of the

product proposed;

(c)

the specific effects the products

proposed may have on the consumer, including

the consequences of default in payment by the

consumer; and

(d)

where ancillary services are

bundled with a credit agreement, whether each

component of the bundle can be terminated

separately and the implications for the

consumer of doing so.

(3) The Director General may adapt the

manner by which and the extent to which the

explanations referred to in sub-regulations (1) and

(2) is given, as well as by whom it is given, to the

circumstances of the situation in which the credit

agreement is offered, the person to whom it is

offered and the nature of the credit offered.".

Regulation 8 of the principal regulations shall be

substituted by the following

8. (1)

Creditors and, where applicable,

tied credit intermediaries shall make available clear

and comprehensible general information about

credit agreements at all times on paper or on another

durable medium or in electronic form, and as much

as possible, in a plain and intelligible language that

can be easily understood by the consumer.

(2) The general information referred to in

sub-regulation (1) shall include at least the

following

(a)

the identity and the geographical

address of the creditor;

(b)

where applicable, the identity and

geographical address of the credit intermediary

involved;

(c)

the purposes for which the credit

may be used;

(d)

the forms of security, including,

where applicable, the possibility for it to be

located in another different Member State;

(e)

a description of the types of credit

agreements available, including a short

description of the differences between fixed

and variable rate products and the related

implications for the consumer;

(f)

a list of related cost elements,

such as administrative costs, insurance costs,

legal costs, and where applicable, the costs of

intermediaries;

(g)

an indication of the cost of a

typical credit agreement for the consumer;

(h)

the possible duration of the credit

agreement;

(i)

an indication of the currency or

currencies in which the credit falling within

the scope of these regulations in accordance

with regulation 3 is available, including an

explanation of the implications for the

consumer where the credit is denominated in a

foreign currency;

(j)

the types of available borrowing

rates, the conditions governing the application

of such rates and, where available, any index

or reference rate applicable to the initial

borrowing rate, as well as the periods,

conditions, and procedures for changing the

borrowing rate

Provided that if different rates

apply in different circumstances, the above

information shall be supplied in respect of all

the applicable rates;

(k)

an indicative example of the total

amount of credit, the total cost of credit to the

consumer, the total amount payable by the

consumer and the APRC;

(l)

an indication of possible further

costs, not included in the total cost of the credit

to the consumer, to be paid in connection with

a credit agreement;

(m)

the range of different options

available for reimbursing the credit to the

creditor, including the number, frequency and

amount of the regular repayment instalments;

(n)

where applicable, a clear and

concise statement that compliance with the

terms and conditions of the credit agreement

does not guarantee repayment of the total

amount of credit under the credit agreement;

(o)

a description of the conditions

directly relating to early repayment;

(p)

whether a valuation of the

property is necessary and, where applicable,

who is responsible for ensuring that the

valuation is carried out, and whether any

related costs arise for the consumer;

(q)

details on how to obtain

information on tax relief on the credit

agreement interest or other public subsidies;

(r)

an indication of ancillary services

the consumer is obliged to acquire in order to

obtain the credit or to obtain it on the terms

and conditions marketed and, where

applicable, a clarification that the ancillary

services may be purchased from a provider that

is not the creditor; and

(s)

a general warning concerning

possible consequences of non-compliance with

the commitments linked to the credit

agreement.

(3) The Director General may oblige

creditors to include other types of warnings which

are relevant in Malta.

(4) The MFSA shall notify to the European

Commission, without delay, any requirements

imposed on creditors in addition to those prescribed

in Article 13(1) of the MCD

Provided that for the purposes of this

sub-regulation, the Director General shall inform the

MFSA, without delay, of any such requirements as

may from time to time be imposed on creditors by

the Director General.".

Immediately after regulation 8 of the principal regulations

there shall be added the following new regulation

8A. (1)

Maltese credit intermediaries

shall, in good time before the carrying out of any of

the credit intermediation activities in terms of the

definition “credit intermediary” in regulation 2,

provide the consumer with at least the following

information on paper or on another durable medium

(a)

the identity and the geographical

address of the Maltese credit intermediary;

(b)

the register in which he has been

included, the registration number, where

applicable, and the means for verifying such

registration;

(c)

whether the Maltese credit

intermediary is tied to or works exclusively for

one or more creditors

Provided that where the Maltese

credit intermediary is tied to or works

exclusively for one or more creditors, it shall

provide the names of the creditors for which it

is acting

Provided further that where the

Maltese credit intermediary meets the

conditions laid down in accordance with

regulation 8B(4), it may disclose that it is

independent;

(d)

whether the Maltese credit

intermediary offers advisory services;

(e)

the fee, where applicable, payable

by the consumer to the Maltese credit

intermediary for its services or, where this is

not possible, the method for calculating the

fee;

(f)

the

procedures

allowing

consumers or other interested parties to

register complaints internally about the

Maltese credit intermediary and, where

appropriate, the means by which recourse to

out-of-court complaint and redress procedures

can be sought;

(g)

where applicable, the existence

and, where known, the amount of commissions

or other inducements, payable by the creditor

or third parties to the Maltese credit

intermediary for its services in relation to the

credit agreement

Provided that where the amount is

not known at the time of disclosure, the

Maltese credit intermediary shall inform the

consumer that the actual amount will be

disclosed at a later stage in the ESIS.

(2) Maltese credit intermediaries who are not

tied but who receive commission from one or more

creditors shall, at the consumer’s request, provide

information on the variation in levels of commission

payable by the different creditors providing the

credit agreements being offered to the consumer.

Maltese credit intermediaries shall also inform

consumers that they have the right to request such

information.

(3) Where a Maltese credit intermediary

charges a fee to the consumer and additionally

receives commission from the creditor or a third

party, the Maltese credit intermediary shall explain

to the consumer whether or not the commission will

be offset against the fee, either in part or in full.

(4) Maltese credit intermediary shall

communicate to the creditor the fee, if any, payable

by the consumer to the Maltese credit intermediary

for its services, for the purpose of calculating the

APRC.".

Immediately after regulation 8A of the principal

regulations there shall be added the following new Part and new

"PART VIII - Advisory Services

8B. (1)

The

creditor

or

credit

intermediary shall explicitly inform the consumer, in

the context of a given transaction, whether advisory

services are being or can be provided to the

consumer.

(2) Before the provision of advisory services

or, where applicable, the conclusion of a contract for

the provision of advisory services, the creditor or

credit intermediary shall provide the consumer with

the following information on paper or another

durable medium

(a)

whether the recommendation will

be based on considering only their own

product range in accordance with sub-

regulation (3)(b) or a wide range of products

from across the market in accordance with sub-

regulation (3)(c) so that the consumer can

understand the basis on which the

recommendation is made;

(b)

where applicable, the fee payable

by the consumer for the advisory services or,

where the amount cannot be ascertained at the

time of disclosure, the method used for its

calculation

Provided that the information referred to

in paragraphs (a) and (b) may be provided to the

consumer in the form of additional pre-contractual

information.

(3) Where advisory services are provided to

consumers, in addition to the requirements set out in

regulations 5 and 6

(a)

creditors or credit intermediaries

shall obtain the necessary information

regarding the consumer’s personal and

financial situation, his preferences and

objectives so as to enable the recommendation

of suitable credit agreements. Such an

assessment shall be based on information that

is up to date at that moment in time and shall

take into account reasonable assumptions as to

risks to the consumer’s situation over the term

of the proposed credit agreement;

(b)

creditors

or

tied

credit

intermediaries shall consider a sufficiently

large number of credit agreements in their

product range and recommend a suitable credit

agreement or several suitable credit

agreements from among their product range

for the consumer’s needs, financial situation

and personal circumstances;

(c)

non-tied credit intermediaries

shall consider a sufficiently large number of

credit agreements available on the market and

recommend a suitable credit agreement or

several suitable credit agreements available on

the market for the consumer’s needs, financial

situation and personal circumstances;

(d)

creditors or credit intermediaries

shall act in the best interests of the consumer

by

(i) informing themselves about

the consumer’s needs and circumstances;

and

(ii) recommending

suitable

credit agreements in accordance with

paragraphs (a), (b) and (c); and

(e)

creditors or credit intermediaries

shall give the consumer a record on paper or

on another durable medium of the

recommendation provided.

(4) The use of the term ‘advice’ and

‘advisor’ or similar terms shall be prohibited when

the advisory services are being provided to

consumers by creditors or tied credit intermediaries.

(5) Creditors and credit intermediaries shall

warn a consumer when, considering the consumer’s

financial situation, a credit agreement may include a

specific risk for the consumer.

(6) Advisory services shall only be provided

by creditors or credit intermediaries.

(7) This regulation is without prejudice to

regulation 7A and to Member States’ competence to

ensure that services are made available to consumers

to help them understand their financial needs and

which types of products are likely to meet those

needs.".

Immediately before regulation 9 of the

principal

regulations there shall be added the following heading

"PART IX - CREDITWORTHINESS ASSESSMENT".

Regulation 9 of the principal regulations shall be

substituted by the following

9. (1)

The creditor shall, before

concluding a credit agreement, make a thorough

assessment of the consumer’s creditworthiness,

taking appropriate account of factors relevant to

verifying the prospect of the consumer to meet his

obligations under the credit agreement.

(2) Creditors shall establish, document and

maintain the procedures and information on which

the assessment referred to in sub-regulation (1) is

based.

(3) The assessment of creditworthiness shall

not rely predominantly on the value of the

residential immovable property exceeding the

amount of the credit or on the assumption that the

residential immovable property will increase in

value unless the purpose of the credit agreement is

to construct or renovate the residential immovable

property.

(4) Where a creditor concludes a credit

agreement with a consumer, the creditor shall not

subsequently cancel or alter the credit agreement to

the detriment of the consumer on the grounds that

the assessment of creditworthiness was incorrectly

conducted

Provided that this sub-regulation shall

not apply where it is demonstrated that the consumer

knowingly withheld or falsified the information

within the meaning of regulation 12.

(5) The creditor shall only make the credit

available to the consumer where the result of the

creditworthiness assessment indicates that the

obligations resulting from the credit agreement are

likely to be met in the manner required under that

agreement.

(6) The creditor shall, in accordance with

Article 10 of the Data Protection Directive, inform

the consumer in advance that a database is to be

consulted.

(7) Where an application for credit is

rejected, the creditor shall inform the consumer

without delay of the rejection in accordance with

regulation 10.

(8) The creditor shall, before any significant

increase in the total amount of credit is granted to

the consumer after the conclusion of the credit

agreement and unless such additional credit was

envisaged and included in the original

creditworthiness

assessment,

re-assess

the

consumer’s creditworthiness on the basis of updated

information.

(9) This regulation shall be without

prejudice to the Data Protection Directive.".

Regulation 10 of the principal regulations shall be

amended as follows

(a)

sub-regulation (1) thereof shall be substituted by

the following

"(1) Where the assessment of the consumer’s

creditworthiness results in a negative prospect for his

ability to repay the credit over the lifetime of the credit

agreement, the creditor shall refuse to provide such

credit.";

(b)

sub-regulation (2) thereof shall be substituted by

the following

"(2) Where the application for credit is rejected,

the creditor shall inform the consumer without delay and

free of charge of the rejection, of the reasons for rejection

and, where applicable, that the decision is based on

automated processing of data.";

(c)

sub-regulation (3) thereof shall be substituted by

the following

"(3) Where the rejection of an application for

credit is based on the result of the database consultation,

the creditor shall inform the consumer without delay and

free of charge of the result of such consultation and of the

particulars of the database consulted, including the name

of the database that was consulted as well as of its

controller and of the consumer’s right to access and, where

necessary, his right to rectify his data in that database

Provided that the creditor shall not be

required to give such information if the information to be

provided is prohibited by any other law, or is contrary to

the public policy or public security of Malta.";

(d)

in sub-regulation (4) thereof, for the words "shall

inform the consumer immediately and without charge" there

shall be substituted the words "shall inform the consumer

without delay and free of charge"; and

(e)

immediately after sub-regulation (6) thereof, there

shall be added the following new sub-regulation

"(7) This regulation shall be without prejudice to

the Data Protection Directive.".

In regulation 11 of the principal regulations, for the words Amends

"home loan agreement" there shall be substituted the words "credit regulation

the principal

regulations.

Regulation 12 of the principal regulations shall be Substitutes

regulation 12 of

substituted by the following

the principal

regulations.

12. (1)

The

assessment

of

creditworthiness referred to in regulation 9 shall be

carried out on the basis of information on the

consumer’s income and expenses and other financial

and economic circumstances which is necessary,

sufficient and proportionate.

(2) The information referred to in sub-

regulation (1) shall be obtained by the creditor from

relevant internal or external sources, including the

consumer, and including information provided to the

credit intermediary during the application process of

the credit

Provided that such information shall be

appropriately verified, including, when necessary,

through reference to independently verifiable

documentation

Provided further that such information

shall be up to date at that moment in time, and on

reasonable assumptions as to the consumer situation

over the term of the proposed credit agreement.

(3) Credit intermediaries shall accurately

submit the necessary information obtained from the

consumer to the relevant creditor to enable the

creditworthiness assessment to be carried out.

(4) Creditors shall specify in a clear and

straightforward way at the pre-contractual phase the

necessary information and independently verifiable

evidence that the consumer needs to provide and the

time-frame within which the consumer needs to

provide the information

Provided that such request for

information shall be proportionate and limited to

what is necessary to conduct a proper

creditworthiness assessment

Provided further that, where necessary to

enable the assessment of creditworthiness, creditors

may seek clarification of the information received in

response to that request.

(5) A creditor shall not terminate the credit

agreement on the grounds that the information

provided by the consumer before the conclusion of

the credit agreement was incomplete

Provided that the creditor may terminate

the credit agreement where it is demonstrated that

the consumer knowingly withheld or falsified the

information.

(6) The Director General shall have

measures in place to ensure that consumers are

aware of the need to provide correct information in

respect to the request referred to in sub-regulation

(4) and that such information is as complete as

necessary to conduct a proper creditworthiness

assessment.

(7) The creditor or credit intermediary shall

warn the consumer that, where the creditor is unable

to carry out an assessment of the creditworthiness

because the consumer chooses not to provide the

information or verification necessary for an

assessment of creditworthiness, the credit cannot be

granted.

(8) The warning referred to in sub-regulation

(7) may be provided in a standardised format.

(9) This regulation shall be without

prejudice to the Data Protection Directive, in

particular Article 6 thereof.".

Regulation 13 of the principal regulations shall be

substituted by the following

13. Without prejudice to the provisions of

the Data Protection Act, personal data obtained from

a consumer or any other person in connection with

the conclusion and management of any credit

agreement may only be processed for the purpose of

assessing the consumer’s creditworthiness or of any

such other person and their ability to repay in

accordance with these regulations.".

Immediately after regulation 13 of the principal Adds new

regulation to the

regulations there shall be added the following new regulation

principal

regulations.

13A. (1)

The Director General shall

ascertain that reliable standards for the valuation of

residential immovable property for the purpose of

credit agreements are developed in Malta.

(2) Creditors shall ensure that the standards

referred to in sub-regulation (1) are used where they

carry out a property valuation, or shall take

reasonable steps to ensure that those standards are

applied where a valuation is conducted by a third

party.

(3) Where third parties or other authorities

are responsible for regulating independent

appraisers who carry out property valuations, the

Director General shall ensure that they comply with

the rules that are in place.

(4) The Director General shall ensure that

internal and external appraisers conducting property

valuations are professionally competent and

sufficiently

independent

from

the

credit

underwriting process relating to credit agreements

so that they can provide an impartial and objective

valuation, which shall be documented in a durable

medium and of which a record shall be kept by the

creditor.".

For the words "Part V" in the heading immediately Amends the

before regulation 14 of the principal regulations there shall be heading

immediately

substituted the words "Part X".

before

regulation 14 of

the principal

regulations.

Regulation 14 of the principal regulations shall be Substitutes

regulation 14 of

substituted by the following

the principal

regulations.

14. (1)

Without prejudice to regulations 7

to 8A, the consumer shall be entitled to receive, free

of charge, a copy of the draft credit agreement

Provided that this sub-regulation shall

not apply if the creditor is, at the time of the

consumer’s request, unwilling to proceed to the

conclusion of the credit agreement with the

consumer.

(2) Without prejudice to the Notarial

Profession and Notarial Archives Act, the consumer

shall be entitled to receive from the Notary Public

(a)

a copy of the public deed of loan,

at his request, immediately upon the signing

thereof; and

(b)

in all instances, a copy of the

public deed of loan duly registered at the

Public Registry by the Notary Public, within

ten days from such registration.".

Regulation 15 of the principal regulations shall be

amended as follows

(a)

in the marginal note thereto, for the words "home

loan agreement" there shall be substituted the words "credit

agreement";

(b)

sub-regulation (2) thereof shall be substituted by

the following

"(2) (a) In the event of any changes in the

borrowing rate, the creditor shall inform the consumer of

any such change, on paper or another durable medium,

before the change takes effect

Provided that such information shall at least

state

(i) the amount of the payments to be made

after the new borrowing rate takes effect; and

(ii) in cases where the number or frequency

of the payments changes, provide the consumer

with particulars of such payment changes.

(b)

Without prejudice to paragraph (a), the

parties to the credit agreement may agree in the credit

agreement that

(i) where the change in the borrowing rate is

correlated with a change in a reference rate, the

information referred to in paragraph (a) is to be

given to the consumer periodically;

(ii) the new reference rate is to be made

publicly available by appropriate means, which

may include a publication on the creditor’s website

or a public advert; and

(iii) the information concerning the new

reference rate is to be kept available in the

premises of the creditor and communicated

personally to the consumer together with the

amount of new periodic instalments.

(c) Where changes in the borrowing rate are

determined by way of auction on the capital markets and it

is therefore impossible for the creditor to inform the

consumer of any change before the change takes effect, the

creditor shall, in good time before the auction, inform the

consumer on paper or on another durable medium of the

upcoming procedure and provide an indication of how the

borrowing rate could be affected."; and

(c)

in sub-regulations (1), (3), and (4) thereof, for the

words "home loan agreement" there shall be substituted the

words "credit agreement".

Regulation 16 of the principal regulations shall be Substitutes

regulation 16 of

substituted by the following

the principal

regulations.

" Early

16. (1)

A consumer shall have the right

payment.

to discharge his obligations under a credit

agreement, in full or in part, before the agreed

termination.

(2) If the consumer pays the credit before the

agreed termination

(a)

the consumer shall be entitled to a

reduction of the total cost of the credit, such

reduction consisting of the interest and the

costs for the remaining duration of the

contract; and

(b)

the creditor shall be entitled to a

fair and objective compensation, where

justified, for possible costs directly linked to

the early repayment of the credit in accordance

with the credit agreement and the information

provided in regulations 8(2)(i) and 15(1)(g)

and (h), so long as the early repayment falls

within a period for which the borrowing rate is

fixed

Provided that said compensation

shall not exceed the financial loss of the

creditor and that no sanction is imposed on the

consumer

Provided

further

that

in

calculating the level of compensation,

consideration shall also be given to the impact

of early repayment on administrative costs

irrespective whether the borrowing rate is

fixed or variable.

(3) In determining the compensation for

possible costs directly linked to early repayment of

credit referred to in sub-regulation (2)(b), a creditor

shall apply the same calculations to all consumers

irrespective of the reason why early repayment was

effected.

(4) Without prejudice to sub-regulations (2)

and (3), the Director General may provide that the

exercise of the right referred to in sub-regulation (1)

is to be subject to certain conditions, which may

include time limitations on the exercise of the right,

a different treatment depending on the type of the

borrowing rate or on the moment the consumer

exercises the right, or restrictions with regard to the

circumstances under which the right may be

exercised.

(5) Where a consumer seeks to discharge his

obligations under a credit agreement before the

agreed termination of the credit agreement, the

creditor shall provide the consumer without delay

after receipt of the request, on paper or on another

durable medium, with the information necessary to

consider that option.

(6) The information referred to in sub-

regulation (5) shall at least quantify the implications

for the consumer of discharging his obligations

before the agreed termination of the credit

agreement and clearly set out any assumptions used

Provided that any assumptions used shall be

reasonable and justifiable.".

Sub-regulation (1) of regulation 17 of the principal Amends

regulation 17 of

regulations shall be substituted by the following

the principal

regulations.

"(1) Where the rights of the creditor under a

credit agreement are, or the agreement itself is,

assigned to a third party, the consumer shall be

entitled to raise against that assignee any defence

available to him against the original creditor,

including the right to set-off

Provided that set-off may only be raised

in accordance with the relevant provisions of

regulations 1196 to 1204 of the Civil Code, which

shall apply irrespective of anything to the contrary

contained in a credit agreement.".

Immediately after regulation 17 of the principal Adds new

regulations to

regulations there shall be added the following new regulations

the principal

regulations.

17A. (1)

The Director General shall ensure

that where a credit agreement relates to a foreign

currency loan, an appropriate regulatory framework

shall be in place at the time the credit agreement is

concluded to ensure that the consumer has a right to

convert the credit agreement into an alternative

currency under specified conditions.

(2) In accordance with sub-regulation (1),

the alternative currency referred to in the preceding

sub-regulation shall be

(a)

the currency in which the

consumer primarily receives income or holds

assets from which the credit is to be repaid, as

indicated at the time the most recent

creditworthiness assessment in relation to the

credit agreement was made; and, or

(b)

the currency of the Member State

in which the consumer either was resident at

the time the credit agreement was concluded or

is currently resident.

(3) Where a consumer has a right to convert

the credit agreement into an alternative currency in

accordance with sub-regulation (1), the exchange

rate at which the conversion is carried out shall be

the market exchange rate applicable on the day of

application for conversion unless otherwise

specified in the credit agreement.

(4) Where a consumer has a foreign currency

loan, the creditor shall warn the consumer on a

regular basis on paper or on another durable medium

at least where the value of the total amount payable

by the consumer which remains outstanding or of

the regular instalments varies by more than 20%

from what it would be if the exchange rate between

the currency of the credit agreement and the

currency of the Member State applicable at the time

of the conclusion of the credit agreement were

applied. The warning shall inform the consumer of a

rise in the total amount payable by the consumer, set

out where applicable the right to convert to an

alternative currency and the conditions for doing so

and explain any other applicable mechanism for

limiting the exchange rate risk to which the

consumer is exposed.

(5) The arrangements applicable under this

regulation shall be disclosed to the consumer in the

ESIS and in the credit agreement. Where there is no

provision in the credit agreement to limit the

exchange rate risk to which the consumer is exposed

to a fluctuation in the exchange rate of less than

20%, the ESIS shall include an illustrative example

of the impact of a 20% fluctuation in the exchange

rate.

(6) The Director General may further

regulate foreign currency loans provided that such

regulation is not applied with retrospective effect.

17B. Where the credit agreement is a variable

rate credit

(a)

any indexes or reference rates

used to calculate the borrowing rate shall be

clear, accessible, objective and verifiable by

the parties to the credit agreement and the

Director General; and

(b)

historical records of indexes for

calculating the borrowing rates shall be

maintained either by the providers of these

indexes or by the creditors.

17C. (1)

Creditors

shall

exercise

reasonable

forbearance

before

foreclosure

proceedings are initiated.

(2) The Director General shall adopt

measures to encourage creditors to exercise

reasonable forbearance in accordance with sub-

regulation (1).

(3) Where the creditor is permitted to define

and impose charges on the consumer arising from

the default, those charges shall not be greater than is

necessary to compensate the creditor for costs it has

incurred as a result of the default.

(4) The parties to a credit agreement may

expressly agree that the return or transfer to the

creditor of the security or proceeds from the sale of

the security is sufficient to repay the credit.

(5) Where the price obtained for the

immovable property affects the amount owed by the

consumer, the Director General shall implement

procedures or measures to enable the best efforts

obtained.

(6) Where after foreclosure proceedings

outstanding debt remains, the Director General shall

ensure that measures to facilitate repayment in order

to protect consumers are put in place.".

For the words "Part VI" in the heading immediately Amends the

before regulation 18 of the principal regulations there shall be heading

immediately

substituted the words "Part XI".

before

regulation 18 of

the principal

regulations.

Regulation 18 of the principal regulations shall be Substitutes

regulation 18 of

substituted by the following

the principal

regulations.

18. (1)

Consumers shall provide creditors

and, where applicable, credit intermediaries with

complete and correct information on their financial

situation and personal circumstances in the context

of the application process for credit.

(2) The information referred to in sub-

regulation (1) shall be supported, when necessary,

by documentary evidence from independently

verifiable sources.

(3) In order for the creditor and, where

applicable, credit intermediaries to be able to

conduct a thorough assessment of the consumer’s

creditworthiness and make a decision on whether or

not to grant the credit under the credit agreement,

the creditors and, where applicable, credit

intermediaries shall at the pre-contractual phase,

clearly specify the information, including

independently verifiable evidence where necessary,

that the consumer needs to provide.

(4) Creditors and, where applicable, credit

intermediaries shall state the timing by which

consumers are required to provide such information.

(5) In cases where the consumer chooses not

to provide the information necessary for an

assessment of his creditworthiness, the creditor or

credit intermediary shall warn the consumer that he

is unable to carry out a creditworthiness assessment

and therefore that the credit agreement may not be

granted. This warning may be provided in a

standardised format.

(6) This regulation is without prejudice to

the application of the Data Protection Act.".

Immediately after regulation 18 of the principal

regulations there shall be added the following new Part and new

"PART XII - Requirements for Establishment of

Credit Intermediaries

18A. (1)

Any credit intermediary who,

carries out all or part of the credit intermediation

activities in terms of the definition "credit

intermediary" in regulation 2, or who provides

advisory services in or from Malta, shall apply for

admission with the MFSA in terms of these

regulations.

(2) An application for admission in terms of

these regulations shall be made in such form and

manner as the MFSA may from time to time

determine.

(3) The MFSA shall have the power to

require any person to provide such information as it

may deem necessary for the purpose of determining

an application for admission or for the purposes of

determining whether to restrict or withdraw an

admission in terms of these regulations

Provided that an application may only be

withdrawn by written notice to the MFSA before

admission is granted or refused.

(4) The MFSA shall determine an

application by doing any of the following

(a)

granting an admission without

conditions;

(b)

granting an admission subject to

such conditions as it may deem appropriate;

(c)

refusing to grant an admission

Provided that if it refuses an

application it shall inform the applicant, in

writing, of the reasons for the refusal.

(5) The MFSA may grant admission in terms

of these regulations only if it is satisfied, on the

basis of the information required to be submitted in

terms of these regulations and any Credit

Intermediaries’ Rules issued thereunder, that

admission ought to be granted.

(6) Subject to the provisions of these

regulations, the MFSA may subject the admission

referred to in this regulation to such conditions as it

may deem appropriate, and having granted an

admission it may, from time to time, vary or revoke

any condition so imposed or impose new conditions.

(7) Credit intermediaries shall not be

admitted by the MFSA unless they fulfil at least the

requirements provided for in regulation 6 and the

following professional requirements

(a)

credit intermediaries shall hold, at

all times, professional indemnity insurance

covering the territories in which they offer

services, or some other comparable guarantee

against liability arising from professional

negligence

Provided that for tied credit

intermediaries who act on behalf of and under

the full and unconditional responsibility of

only one creditor, such a professional

indemnity insurance or other comparable

guarantee shall be provided by the creditor for

which the credit intermediary is empowered to

act;

(b)

a natural person established as a

credit intermediary, the members of the Board

of Directors of a credit intermediary

established as a legal person and natural

persons performing equivalent tasks within a

credit intermediary which is a legal person but

does not have a Board of Directors, shall be of

good repute. Such persons shall, as a

minimum, have a clean police record or any

other national equivalent in relation to serious

criminal offences linked to crimes against

property or other crimes related to financial

activities and they shall not have previously

been declared bankrupt, unless they have been

rehabilitated in accordance with national law;

(c)

a natural person established as a

credit intermediary, the members of the Board

of Directors of a credit intermediary

established as a legal person and natural

persons performing equivalent tasks within a

credit intermediary which is a legal person but

does not have a Board of Directors, shall

possess the appropriate level of knowledge and

competence in relation to credit agreements.

(8) The MFSA shall, for the purposes of

paragraph (c) of sub-regulation (7) establish the

appropriate level of knowledge and competence in

accordance with the principles set out in the Third

Schedule.

(9) A credit intermediary admitted in terms

of these regulations shall provide the MFSA with

particulars of any changes in the information

provided under these regulations and any Credit

Intermediaries’ Rules issued thereunder as soon as

such credit intermediary becomes aware of such

change.

(10) Where Malta is the home Member State,

all Maltese credit intermediaries, whether

established as natural or legal persons, shall be

entered into a register with the MFSA.

(11) The register referred to in sub-regulation

(10) shall be maintained by the MFSA, who shall

ensure that the said register is kept up to date and is

publicly available online.

(12) The register referred to in sub-regulation

(10) shall contain at least the following information

(a)

the names of the persons within

the management who are responsible for the

intermediation business;

(b)

the Member States in which the

Maltese credit intermediary conducts business

under the rules on the freedom of

establishment or the freedom to provide

services and of which the Maltese credit

intermediary has informed the MFSA in

accordance with Article 32(3) of the MCD;

(c)

whether the Maltese credit

intermediary is tied or not;

(d)

where a tied credit intermediary

acts on behalf of and under the full and

unconditional responsibility of only one

creditor, the creditor on whose behalf the tied

credit intermediary acts.

(13) Any credit intermediary who is to be

admitted under these regulations who -

(a)

is a legal person, shall have its

head office and its registered office in Malta;

(b) is not a legal person, shall have its

head office in Malta and shall actually carry on

its main business in Malta.

(14) The MFSA shall establish a single

information point to allow quick and easy public

access to information from the register referred to in

sub-regulation (10), which shall be compiled

electronically and kept constantly updated.

(15) Without prejudice to regulations 18B and

18C, all admitted credit intermediaries shall comply

with the requirements defined in sub-regulations (6),

(7) and (8) on a continuing basis.

(16) The MFSA may issue, amend or revoke

Credit Intermediaries’ Rules as it shall consider

appropriate for carrying into effect the provisions of

this regulation.

(17) This regulation shall not apply to credit

institutions licensed in terms of the Banking Act

and, or to financial institutions licensed in terms of

the Financial Institutions Act.

18B. (1)

Tied

credit

intermediaries

specified in paragraph (a) of the definition "tied

credit intermediary" in regulation 2, may be

admitted by the MFSA through the creditor on

whose behalf the tied credit intermediary is

exclusively acting.

(2) In the cases referred to in sub-regulation

(1), the creditor shall remain fully and

unconditionally responsible for any action or

omission on the part of the tied credit intermediary

that is acting on behalf of the creditor in areas

regulated by the provisions of these regulations.

(3) The creditor shall ensure that the tied

credit intermediaries referred to in this regulation

comply with at least the professional requirements

set out in regulation 18A(7) and (8).

(4) Without prejudice to regulations 22F and

22G, creditors shall monitor the activities of tied

credit intermediaries specified in paragraph (a) of

the definition "tied credit intermediary" in

regulation 2 in order to ensure that they comply with

the provisions of these regulations. In particular, the

creditor shall be responsible for monitoring

compliance with the knowledge and competence

requirements of the tied credit intermediary and its

staff.

18C. Maltese credit intermediaries shall not

appoint appointed representatives.

18D. (1)

Where Malta is the home Member

State, the admission of a credit intermediary by the

MFSA shall, provided the activities that the credit

intermediary intends to carry out in the host Member

State are covered by the said admission and in

accordance with regulation 18A(1), be effective for

the entire territory of the European Union without

further admission being required by the European

regulatory authority of the host Member State for the

carrying out of the activities and provision of service

covered by the admission

Provided

that

Maltese

credit

intermediaries shall not be allowed to provide their

services in relation to credit agreements offered by

(a)

financial institutions licensed in

terms of the Financial Institutions Act, to

consumers in a host Member State in which

such financial institutions are not allowed to

operate;

(b)

credit institutions licensed in

terms of the Banking Act to consumers in a

host Member State, where such credit

institutions have not exercised their right to

establish a branch or to provide services in the

relevant host Member State in terms of the

Banking Act or any regulations made or

Banking Rules issued thereunder.

(2) Where Malta is the home Member State,

any Maltese credit intermediary intending to carry

out business for the first time in one or more

Member States under the freedom to provide

services or when establishing a branch, shall inform

the MFSA.

(3) Within a period of one month after being

informed in accordance with sub-regulation (2), the

MFSA shall notify the European regulatory

authority of the host Member State concerned of

(a)

the intention of the Maltese credit

intermediary; and

(b)

where

the

Maltese

credit

intermediary is a tied credit intermediary, the

creditors to which the Maltese credit

intermediary is tied and whether the creditors

take full and unconditional responsibility for

the Maltese credit intermediary’s activities.

(4) The MFSA shall also, at the same time as

a notification is sent to the European regulatory

authority of the host Member State concerned,

inform the Maltese credit intermediary concerned of

that notification.

(5) The Maltese credit intermediary may

only start business in the host Member State

concerned one month after the date on which he was

informed by the MFSA in accordance with sub-

regulation (4).

(6) Where the European regulatory authority

of the host Member State concerned indicates to the

Maltese credit intermediary the conditions under

which, in areas not harmonised in European Union

law, the activities of the Maltese credit intermediary

are to be carried out in the host Member State

concerned in accordance with Article 32(4) of the

MCD, the Maltese credit intermediary shall carry

out its activities in the host Member State in

accordance with the conditions indicated by the

European regulatory authority of the host Member

State concerned.

18E. (1)

Where Malta is the host Member

State, a European credit intermediary shall only

carry out in Malta activities which are covered by

the admission granted by the European regulatory

authority of the home Member State without further

admission by the MFSA being required

Provided

that

European

credit

intermediaries may not provide their services in

relation to credit agreements offered by

(a)

non-credit institutions established

in other Member States to consumers in Malta

where such non-credit institutions are not

allowed to operate in Malta; or

(b)

credit institutions authorised in

other Member States in terms of the CRD,

where such credit institutions have not

exercised their right to establish a branch or to

provide services in Malta in terms of the CRD.

(2) Appointed representatives appointed by

European credit intermediaries may not carry out

any of the credit intermediation activities in terms of

the definition "credit intermediary" in regulation 2,

or provide advisory services in Malta.

(3) Where a European credit intermediary

informs the European regulatory authority of the

home Member State about its intention to carry out

business for the first time in Malta under the

freedom to provide services or when establishing a

branch in accordance with Article 32(3) of the

MCD, the European regulatory authority of the

home Member State shall, in accordance with

Article 32(3) of the MCD, notify the Director

General of

(a)

the intention of the European

credit intermediary; and

(b)

where the European credit

intermediary is a tied credit intermediary, the

creditors to which the European credit

intermediary is tied and whether the creditors

take full and unconditional responsibility for

the European credit intermediary’s activities

(4) The MFSA shall use the information

received in accordance with sub-regulation (3) to

enter the necessary information into its register.

(5) A European credit intermediary may

only start business in Malta one month after the date

on which he is informed by the European regulatory

authority of the home Member State of the

notification submitted to the MFSA in accordance

with Article 32(3) of the MCD.

(6) Before the branch of a European credit

intermediary commences its activities, or within two

months of receiving the notification referred to sub-

regulation (3), the MFSA shall prepare for the

supervision of the European credit intermediary in

accordance with regulations 22F and 22G and, if

necessary, indicate to the European credit

intermediary the conditions under which, in areas

not harmonised in European Union law, those

activities are to be carried out in Malta.

18F. (1)

An admission granted to a credit

intermediary by the MFSA shall automatically cease

to have any effect if the holder

(a)

expressly

renounces

the

admission;

(b)

has carried out neither credit

intermediation activities in terms of the

definition "credit intermediary" in regulation

2, nor provided advisory services, for the

preceding six months; or

(c)

where the credit intermediary is a

legal person, has ceased to operate as a result

of a merger with another credit intermediary or

for any other reason whatsoever.

(2) The MFSA may withdraw the admission

granted to a credit intermediary in accordance with

regulation 18A where such a credit intermediary

(a)

has obtained the admission

through false or misleading statements or any

other irregular means;

(b)

no longer fulfils the requirements

under which admission was granted;

(c)

has seriously or systematically

infringed the provisions of these regulations

governing the operating conditions for credit

intermediaries;

(d)

if any document or information

accompanying an application for an admission

or any information given in connection

therewith is false in any material particular;

(e)

conceals from, or fails to notify

the MFSA with any document or information

or change therein which it was its duty to

reveal or notify under these regulations or any

Credit

Intermediaries’

Rules

issued

thereunder;

(f)

where the credit intermediary is a

legal person, is declared bankrupt or, goes

into liquidation or is otherwise dissolved;

(g)

fails to comply with any of the

provisions of these regulations or any Credit

Intermediaries’ Rules issued thereunder or

with the conditions under which the admission

is granted; or

(h)

has insufficient assets to cover its

liabilities.

(3) Where Malta is the home Member State

and where the admission of a credit intermediary is

withdrawn by the MFSA in accordance with sub-

regulation (2), the MFSA shall immediately notify

the European regulatory authority of the relevant

host Member States of such withdrawal as soon as

possible and at the latest within fourteen days of the

date of withdrawal, by any appropriate means.

(4) The MFSA shall, without undue delay,

delete from the register referred to in regulation 18A

any credit intermediaries whose admission has been

withdrawn.

(5) The MFSA may also impose restrictions

on an admission granted in terms of these

regulations as it shall consider appropriate for the

proper compliance by credit intermediaries with the

provisions of these regulations, any Credit

Intermediaries’ Rules issued thereunder and the

conditions, if any, of its admission, and may include

(a)

the removal of any officer of the

credit intermediary or the replacement of any

officer by such person as the MFSA may

designate;

(b)

the requirement for the credit

intermediary to take or refrain from any action;

(c)

the requirement that the credit

intermediary be prohibited from undertaking

any transaction or transactions or any class of

business or be permitted to undertake any

transaction or transactions or any class of

business only upon such terms as the MFSA

may prescribe

Provided that the MFSA shall have the

power to vary or remove any restrictions imposed

under this regulation.

(6) Where the MFSA intends to restrict or

withdraw an admission or to vary any restriction, it

shall serve written notice of its intention on the

credit intermediary; such notice shall specify the

grounds upon which the MFSA intends to take

action and shall specify a period within which the

credit intermediary shall be entitled to make

representations to the MFSA as to why such action

should not be taken. Unless the MFSA decides that

the matter is urgent, it shall not impose or vary any

restriction or withdraw an admission before the

expiry of such period.

(7) Where the MFSA is satisfied that the

circumstances so warrant, it may at any time make

public any action it has taken under this regulation.".

For the words "Part VII" in the heading immediately

before regulation 19 of the principal regulations there shall be

substituted the words "Part XIII".

Regulation 19 of the principal regulations shall be

substituted by the following

" Advertising.

19. (1)

Without prejudice to Directive

2005/29/EC, any advertising and marketing

communications concerning credit agreements shall

be fair, clear and not misleading. In particular,

wording that may create false expectations for a

consumer regarding the availability or the cost of a

credit agreement shall be prohibited.

(2) Without prejudice to the provisions

relating to unfair commercial practices under the

Act, any advertising concerning credit agreements

which indicates an interest rate or any figures

relating to the cost of the credit to the consumer,

shall include the standard information in

accordance with this regulation.

(3) The standard information referred to in

sub-regulation (2) shall specify in a clear, concise

and prominent way

(a)

the identity of the creditor or,

where applicable, the credit intermediary;

(b)

that the product advertised is a

credit agreement and, where applicable, that

the credit agreement will be secured by a

hypothec or privilege on residential

immovable property, by a right related to

residential immovable property;

(c)

the borrowing rate, indicating

whether this is fixed or variable or a

combination of both;

(d)

particulars of any charges

included in the total cost of credit to the

consumer;

(e)

the total amount of credit;

(f)

the APRC which shall be

included in the advertisement at least as

prominently as any interest rate;

(g)

where applicable, the duration of

the credit agreement;

(h)

where applicable, the total

amount payable by the consumer;

(i)

where applicable, the amount of

the instalments and the amount of each

repayment of credit;

(j)

where applicable, a warning

regarding the fact that possible fluctuations of

the exchange rate could affect the amount

payable by the consumer; and

(k)

where applicable, a warning

concerning the risk of losing the immovable

property in the event of non-observance of the

commitments linked to the credit agreement.

(4) The information listed in sub-regulation

(3) other than that listed in paragraphs (a), (b) or (j)

thereof, shall be specified by means of a

representative example and shall adhere to that

representative example throughout

Provided that the Director General shall

adopt criteria for determining a representative

example.

(5) (a)

Any advertising concerning

credit agreements which include an interest rate or

any figures relating to the cost of the credit to the

consumer, shall include a clear and concise

statement in respect of any obligation to enter into a

contract in respect of an ancillary service relating to

the credit agreement, in particular an insurance

service, where

(i)

the conclusion of that service is

compulsory in order to obtain the credit or to

obtain it on the terms and conditions

advertised; and

(ii)

the cost of that service cannot be

determined in advance.

(b)

The obligation referred to in

paragraph (a) shall be advertised in a prominent

way together with the APRC.

(6) The information referred to in sub-

regulations (3) and (5) shall be easily legible or

clearly audible as appropriate, depending on the

medium used for advertising and marketing.

(7) The Director General may require the

inclusion of a concise and proportionate warning

concerning specific risks associated with credit

agreements

Provided that the Director General shall

notify the MFSA of any such requirements without

undue delay

Provided further that the MFSA shall,

upon receipt of the notification from the Director

General referred to in this sub-regulation, notify

those requirements to the European Commission

without delay.

(8) This regulation shall be without

prejudice to Directive 2005/29/EC.".

Immediately after regulation 19 of the principal

regulations there shall be added the following new regulation

19A. (1)

Whilst bundling practices shall

be allowed, tying practices shall be prohibited.

(2) Notwithstanding sub-regulation (1)

creditors can request the consumer or a family

member or close relation of the consumer to open

or maintain a payment or a savings account, where

the only purpose of such an account is to

accumulate capital to repay the credit, to service the

credit, to pool resources to obtain the credit, or to

provide additional security for the creditor in the

event of default.

(3) Creditors may require the consumer to

hold a relevant insurance policy related to the credit

agreement

Provided that a creditor shall accept

insurance policies from a supplier different to his

preferred supplier where such policy has a level of

guarantee equivalent to the one the creditor has

proposed.".

Regulation 20 of the principal regulations shall be Substitutes

substituted by the following

20. (1)

Maltese and European creditors

shall have access to databases used in Malta for

assessing the creditworthiness of consumers

Provided that creditors may only access

such databases for the sole purpose of monitoring

consumers’ compliance with the credit obligations

over the life of the credit agreement.

(2) Any conditions imposed for access to

the databases referred to in sub-regulation (1) shall

be non-discriminatory.

(3) Sub-regulation (1) shall apply both to

databases which are operated by private credit

bureaux or credit reference agencies and to public

registers

Provided that a request by a creditor for

access to such databases may be refused by the

holder of the database if the information to be

provided is prohibited by any other law, or is

contrary to the public policy or public security of

Malta.

(4) This regulation shall be without

prejudice to the Data Protection Directive.".

Regulation 21 of the principal regulations shall be Substitutes

substituted by the following

21. (1)

The annual percentage rate of

charge shall be calculated in accordance with the

mathematical formula set out in the Second

Schedule.

(2) The costs of opening and maintaining a

specific account, of using a means of payment for

both transactions and drawdowns on that account

and of other costs relating to payment transactions

shall be included in the total cost of credit to the

consumer whenever the opening or maintaining of

an account is obligatory in order to obtain the credit

or to obtain it on the terms and conditions

marketed.

(3) The calculation of the annual percentage

rate of charge shall be based on the assumption that

the credit agreement is to remain valid for the

period agreed and that the creditor and the

consumer will fulfil their obligations under the

terms and by the dates specified in the credit

agreement.

(4) In the case of credit agreements

containing clauses allowing variations in the

borrowing rate and, where applicable, in the

charges contained in the annual percentage rate of

charge but unquantifiable at the time of calculation,

the annual percentage rate of charge shall be

calculated on the assumption that the borrowing

rate and other charges will remain fixed in relation

to the level set at the conclusion of the contract.

(5) For credit agreements for which a fixed

borrowing rate is agreed in relation to the initial

period of at least five years, at the end of which a

negotiation on the borrowing rate takes place to

agree on a new fixed rate for a further material

period, the calculation of the additional, illustrative

annual percentage rate of charge disclosed in the

ESIS shall cover only the initial fixed rate period

and shall be based on the assumption that, at the

end of the fixed borrowing rate period, the capital

outstanding is repaid.

(6) Where the credit agreement allows for

variations in the borrowing rate, creditors shall

inform consumers of the possible impacts of

variations on the amounts payable and on the

annual percentage rate of charge at least by means

of the ESIS, by providing the consumer with an

additional annual percentage rate of charge which

illustrates the possible risks linked to a significant

increase in the borrowing rate

Provided that where the borrowing rate

is not capped, the information referred to in this

sub-regulation shall be accompanied by a warning

highlighting that the total cost of the credit to the

consumer, shown by the annual percentage rate of

charge, may change

Provided further that this sub-regulation

shall not apply to credit agreements where the

borrowing rate is fixed for an initial period of at

least five years, at the end of which a negotiation on

the borrowing rate takes place in order to agree on a

new fixed rate for a further material period, for

which an additional, illustrative annual percentage

rate of charge is provided for in the ESIS.

(7) Where applicable, the additional

assumptions set out in the Second Schedule shall be

used in calculating the annual percentage rate of

charge.".

Immediately after regulation 21 of the principal Adds new

regulations there shall be added the following new regulation

21A. (1)

The Director General shall

ensure that appropriate mechanisms are in place in

Malta to ensure that the claim against the security is

enforceable by or on behalf of creditors.

(2) Creditors shall keep appropriate records

concerning the types of immovable property

accepted as a security as well as the related

underwriting policies used in relation to credit

agreements.

(3) The Director General shall take the

necessary measures to ensure an appropriate

statistical monitoring of the residential property

market, including for market surveillance purposes,

where appropriate by encouraging the development

and use of specific price indexes which may be

public or private or both.".

Regulation 22 of the principal regulations shall be

substituted by the following

22. (1)

Without prejudice to the

responsibilities and obligations of European

regulatory authorities in accordance with the MCD,

it shall be the responsibility of the competent

authorities to

(a)

monitor the working and

effectiveness of these regulations and to take

such measures as may be deemed necessary in

order to ensure compliance with these

regulations; and

(b)

supervise creditors and credit

intermediaries in terms of these regulations,

and ensure that there is compliance by them

with the obligations identified under these

regulations

Provided that the allocation of tasks

between the competent authorities and the

European regulatory authorities in accordance with

Article 34 of the MCD shall be without prejudice to

Member States’ competences in relation to fields

not covered by the MCD in conformity with their

obligations under European Union law.

(2) For the purposes of sub-regulation (1),

the MFSA may

(a)

require a credit intermediary to

take the necessary measures at an early stage

to address relevant problems in circumstances

where the credit intermediary does not meet

the requirements of these regulations or any

Credit

Intermediaries’

Rules

issued

thereunder, or where the MFSA has evidence

that the credit intermediary is likely to breach

these

regulations

or

any

Credit

Intermediaries’ Rules issued thereunder,

within the following twelve months; and

(b)

require a credit intermediary to

submit any information as the MFSA may

determine, or as the MFSA may from time to

time require, in such form and at such time or

times or at such intervals or in respect of such

period or periods as may be prescribed by the

MFSA.

(3) Credit intermediaries shall submit to the

MFSA any information which it may reasonably

require in the exercise of its duties under these

regulations and any Credit Intermediaries’ Rules

issued thereunder, and the MFSA may enquire into

and ask for clarification of any information so

submitted.

(4) The MFSA may also authorise an

officer, employee, agent or inspector of the MFSA,

on producing evidence of his authority, to require

any credit intermediary to provide him forthwith

with such information, or to produce to him

forthwith such documents, as he may specify, being

such information or documents as the MFSA may

reasonably require for the performance of its

functions under these regulations or any Credit

Intermediaries’ Rules made thereunder

Provided that any such officer,

employee, agent or inspector shall have the power

to require the production of those documents from

any person who appears to be in possession of

them.

(5) The power under this regulation to

require an intermediary or any other person to

produce any documents includes the power -

(a)

if the documents are produced, to

take copies of them or extracts from them and

to require that credit intermediary or person,

or any other person who is a present or past

officer of, or is or was at any time employed

by or acting as an employee of, the credit

intermediary in question, to provide an

explanation of any of them; and

(b)

if the documents are not

produced, to require the person who was

required to produce them to state, to the best

of his knowledge and belief, where they are.

(6) Without prejudice to articles 4(2) and 17

of the Malta Financial Services Authority Act, the

MFSA may provide any information submitted by a

credit intermediary to the MFSA or to any of its

officers, servants or agents, to the Director General

without such an act being considered as a breach of

any confidentiality or professional secrecy

obligations in terms of national law.".

Immediately after regulation 22 of the principal

regulations there shall be added the following new regulations

22A. (1)

Any officer, employee or agent

of the MFSA may, for the purposes of regulation

22(1), carry out investigations on and, or, on-site

inspections at the premises of, any person who

appears to be in possession of relevant information.

(2) For the purposes of sub-regulation (1),

the MFSA may appoint one or more competent

persons, as inspectors, to investigate and report on

the nature, conduct or state of the credit

intermediary’s business or any particular aspect of

it

Provided that if any such person

appointed under this sub-regulation deems it

necessary for the purposes of his investigation or

for the purposes of an on-site inspection, he may

also investigate and report on the business of any

person who is or has at any relevant time been

involved with, or in any matters of, the credit

intermediary concerned, including

(a)

a holding company, subsidiary or

a company which is a connected person of the

credit intermediary under investigation; or

(b)

a subsidiary or a company which

is a connected person of a holding company

of that credit intermediary; or

(c)

a holding company of a

subsidiary of that credit intermediary; or

(d)

a controller of that credit

intermediary; or

(e)

an outsourcing service provider

of that credit intermediary.

(3) Where the MFSA decides to investigate

the business of, or carry out an on-site inspection at

the premises of, any person in terms of sub-

regulation (1), it shall inform that person by notice

in writing.

(4) It shall be the duty of every person who

is or was an officer or employee of, or who is

otherwise related to the credit intermediary, which

is under investigation in terms of these regulations

(a)

to produce to the person or

persons appointed under sub-regulation (2),

within such time and at such place as they

may require, all documents relating to the

person concerned which are in his custody or

power;

(b)

to attend before the person or

persons so appointed at such time and place

as they may require; and

(c)

otherwise to give such person or

persons all assistance in connection with the

investigation which he is reasonably able to

give, and such person or persons may take

copies of or extracts from any documents

produced to them under paragraph (a).

(5) A person exercising powers by virtue of

an appointment under this regulation shall, if so

required, produce evidence of his authority.

(6) No person shall -

(a)

without lawful excuse fail to

produce any documents which it is his duty to

produce under sub-regulation (4);

(b)

without lawful excuse fail to

attend before the person or persons appointed

under sub-regulation (2) when required to do

so; or

(c)

without lawful excuse fail to

answer any question which is put to him by

persons so appointed.

(7) A statement made by a person in

compliance with a requirement imposed by virtue

of this regulation may be used as evidence against

him.

(8) The MFSA shall have the power to

order that all expenses of, and incidental to, an

investigation pursuant to this regulation be paid by

the credit intermediary concerned.

22B. (1)

Any officer, employee, agent or

inspector of the MFSA may, on producing, if

required, evidence of his authority

(a)

enter any premises occupied by a

person on whom a notice has been served in

terms of regulation 22A for the purpose of

obtaining the information or documents

required by that notice;

(b)

enter any premises occupied by

any person on whom a notice could be served

in terms of regulation 22A for the purpose of

obtaining there such information or

documents as may be specified by the MFSA,

being information or documents that could

have been required by such a notice

Provided that the MFSA shall not

authorise any person to act under paragraph (b)

unless it has reasonable cause to believe that if such

a notice were served it would not be complied with

or that any documents to which it would relate

would be removed, tampered with or destroyed

Provided further that where an entry as

is mentioned in this sub-regulation involves

premises that are occupied for the purposes of

habitation, such entry shall be carried out in the

presence of an officer of the Police of a rank not

below that of inspector and shall moreover not take

place between nine in the evening and five in the

morning.

(2) No person shall intentionally obstruct a

person exercising rights conferred by this

regulation.

22C. (1)

Where the MFSA has reasonable

grounds for suspecting that a person has

contravened or has failed to comply with any

provision of these regulations or any Credit

Intermediaries’ Rules issued thereunder, it may by

notice in writing require that person or any other

person

(a)

to provide at such place as may

be specified in the notice and either forthwith

or at such time as may be so specified, such

information as it may reasonably require for

the purpose of investigating the suspected

contravention or failure to comply;

(b)

to produce, at such place as may

be specified in the notice and either forthwith

or at such time as may be so specified, such

documents, or documents of such description

as may be specified which it may reasonably

require for that purpose;

(c)

to attend at such place and time

as may be specified in the notice, and answer

questions relevant for determining whether

such a contravention or failure to comply has

occurred.

(2) The MFSA or its duly authorised

officer, employee, agent or inspector, may take

copies of or extracts from any documents produced

under this regulation.

(3) Any officer, employee, agent or

inspector of the MFSA may, between five o’clock

in the morning and nine o'clock at night, on

producing if required evidence of his authority,

enter any premises occupied by a person on whom

a notice has been served in terms of sub-regulation

(1) for the purpose of obtaining there the

information or documents required by the notice,

putting the questions referred to in paragraph (c) of

that sub-regulation or exercising the powers

conferred by sub-regulation (2).

(4) No person shall without lawful excuse

fail to comply with a requirement imposed on him

under this regulation or intentionally obstruct a

person in the exercise of the rights conferred by

sub-regulation (3).

(5) A statement made by a person in

compliance with a requirement imposed by virtue

of this regulation may be used as evidence against

him.

22D. No person who knows or suspects that

an investigation is being or is likely to be carried

out in terms of these regulations may falsify,

conceal, destroy or otherwise dispose of, or cause

or permit the falsification, concealment, destruction

or disposal of, documents which he knows or

suspects are or would be relevant to such an

investigation unless he proves that he had no

intention of concealing facts disclosed by the

documents from persons carrying out such an

investigation.

22E. Every officer of a credit intermediary

shall take all reasonable steps

(a)

to secure compliance by the

credit intermediary with all of the provisions

of these regulations or any Credit

Intermediaries’ Rules issued thereunder and

of its admission in terms of these regulations;

and

(b)

to ensure that no incorrect

information is provided to the MFSA either

wilfully or as the result of gross negligence.

22F. (1)

Maltese credit intermediaries

shall comply with these regulations and shall be

subject to supervision of their ongoing activities by

the competent authorities

Provided that where Maltese credit

intermediaries provide services within the territory

of another Member State through the establishment

of a branch

(a)

Maltese credit intermediaries

shall, with respect to the services provided

within the territory of the Member State

concerned, comply with the obligations laid

down in Articles 7(1), 8, 9, 10, 11, 13, 14, 15,

16, 17, 20, 22 and 39 of the MCD and with

any measures adopted pursuant thereto by the

host Member State concerned; and

(b)

the

European

regulatory

authority of the host Member State concerned

shall, in accordance with Article 34(3) of the

MCD, have the right to examine branch

arrangements and to request such changes as

may be strictly needed to fulfil its obligations

under Article 34(2) of the MCD and to enable

the Director General to enforce the

obligations under regulation 5(2), (3) and (4)

and any measures adopted pursuant thereto by

the Director General with respect to the

services provided by the branch.

(2) Where Malta is the home Member State,

the competent authorities shall determine on a case-

by-case basis, whether tied credit intermediaries

who are admitted in terms of these regulations and

who act for and on behalf of a Maltese creditor, are

to be subject to supervision directly or as part of the

supervision of the creditor on behalf of which they

act

Provided that if such tied credit

intermediaries provide services in another Member

State, such tied credit intermediaries shall be

subject to supervision directly.

(3) Where Malta is the home Member State,

a European regulatory authority may, in accordance

with Article 34(2) of the MCD, where it ascertains

that a Maltese credit intermediary providing

services within its territory through the

establishment of a branch is in breach of the

measures adopted in the relevant host Member

State pursuant to regulations Articles 7(1), 8, 9, 10,

11, 13, 14, 15, 16, 17, 20, 22 and 39 of the MCD,

require the Maltese credit intermediary concerned

to put an end to its irregular situation

Provided that if the Maltese credit

intermediary concerned fails to take the necessary

steps, the European regulatory authority of the host

Member State concerned may, in accordance with

Article 34(2) of the MCD, take all appropriate

action to ensure that the Maltese credit

intermediary concerned puts an end to its irregular

situation

Provided further that in such cases, the

European regulatory authority shall, in accordance

with Article 34(2) of the MCD communicate the

nature of any such action to the MFSA.

(4) In the event that, despite the action

taken by the European regulatory authority of the

host Member State concerned in accordance with

Article 34(2) of the MCD, the Maltese credit

intermediary persists in breaching the measures

referred to in Article 34(2) of the MCD in force in

the host Member State concerned, the European

regulatory authority of the host Member State may,

in accordance with Article 34(2) of the MCD, take

appropriate action to prevent or to penalise further

irregularities and, in so far as necessary, to prevent

the Maltese credit intermediary from initiating any

further transactions within its territory

Provided that where the MFSA or the

Director General, as the case may be, disagrees

with any such actions taken by the European

regulatory authority of the host Member State

concerned, the Director General may refer the

matter to the EBA and request its assistance in

accordance with Article 19 of Regulation (EU) No

1093/2010.

(5) Where Malta is the home Member State

and the European regulatory authority of a host

Member State refers findings to the MFSA in

accordance with Article 34(4) of the MCD, with

respect to breaches by Maltese credit

intermediaries acting under the freedom to provide

services or the freedom of establishment in the host

Member State concerned, of the obligations arising

from the measures adopted pursuant to the MCD

other than those specified in Article 34(2) of the

MCD, the MFSA or the Director General, as the

case may be, shall take appropriate action

Provided that where the MFSA or the

Director General, as the case may be, fail to take

any such action within one month from obtaining

those findings, or where, despite any such action

taken by the MFSA or the Director General, as the

case may be, the Maltese credit intermediary

concerned persists in acting in a manner that is

clearly prejudicial to the interests of the consumers

of the relevant host Member State or the orderly

functioning of the markets, the European regulatory

authority of the host Member State concerned may,

in accordance with Article 34(4) of MCD

(a)

after having informed the MFSA,

take all appropriate action needed to protect

consumers and ensure the proper functioning

of the markets, including by preventing the

offending Maltese credit intermediary form

initiating any further transactions within the

territory of the host Member State;

(b)

refer the matter to the EBA and

request its assistance in accordance with

Article 19 of Regulation (EU) No 1093/2010.

(6) The MFSA shall forward to the Director

General any information received from European

regulatory authorities of host Member States in

accordance sub-regulations (3) and (5).

(7) Where Malta is the home Member State

and a Maltese credit intermediary provides services

within the territory of another Member State

through the establishment of a branch, the MFSA

and the Director General may, in the exercise of

their responsibilities and in accordance with Article

34(5) of the MCD, carry out on-site inspections in

that branch

Provided that such on-site inspections

shall only be carried out following a notification by

the MFSA to the European regulatory authority of

the host Member State concerned.

(8) For the purposes of this regulation, the

Director General and the MFSA shall collaborate

closely and shall cooperate whenever necessary,

including by exchanging all the necessary

information in order for such competent authorities

to be able to fulfil their respective duties,

responsibilities and obligations.

22G. (1)

Branches in Malta of European

credit intermediaries shall comply with the

obligations laid down in regulations 4A, 5(1), 6, 7,

7A, 8, 8A, 8B, 12A, 19, 21 and 24A and with any

measures adopted pursuant thereto by the MFSA

and, or the Director General, as the case may be,

and shall be subject to supervision by such

competent authorities of their ongoing activities

with respect to such obligations and measures

Provided that where Malta is the host

Member State, the MFSA and, or the Director

General, as the case may be, shall also have the

right to examine branch arrangements and to

request such changes as are strictly needed to fulfil

their responsibilities under Article 34(2) of the

MCD and to enable the European regulatory

authority of the home Member State concerned to

enforce the obligations under Articles 7(2), (3) and

(4) of the MCD and any measures adopted pursuant

thereto by the home Member State concerned with

respect to the services provided by the branch of

the European credit intermediary.

(2) Where Malta is the host Member State

and the MFSA and, or the Director General, as the

case may be, ascertain that a European credit

intermediary providing services in Malta through

the establishment of a branch is in breach of the

measures adopted in Malta pursuant to regulations

4A, 5(1), 6, 7, 7A, 8, 8A, 8B, 12A, 19, 21 and 24A,

such competent authorities shall require the

European credit intermediary concerned to put an

end to its irregular situation.

(3) In the event that a European credit

intermediary providing its services in Malta

through the establishment of a branch fails to take

the necessary steps following a request made by the

MFSA and, or the Director General, as the case

may be, in accordance with sub-regulation (2), such

competent authorities shall take appropriate action

to ensure that the European credit intermediary

concerned puts an end to its irregular situation

Provided that the MFSA shall

communicate the nature of such action to the

European regulatory authority of the home Member

State concerned.

(4) In the event that, despite the action

taken by the MFSA and, or the Director General, as

the case may be, in accordance with sub-regulation

(3), the European credit intermediary concerned

persists in breaching the measures referred to in

sub-regulation (2), the MFSA and, or the Director

General, as the case may be, may take appropriate

action to prevent or to penalise further irregularities

and, in so far as necessary, to prevent the European

credit intermediary form initiating any further

transactions in Malta

Provided that in any such case, the

MFSA shall

(a)

before any appropriate action is

taken by the MFSA and, or the Director

General, as the case may be, in accordance

with this sub-regulation, inform the European

regulatory authority of the home Member

State concerned;

(b)

inform

the

European

Commission of any such action without

undue delay

Provided further that where the

European regulatory authority of the home Member

State concerned disagrees with any such action

taken by the MFSA and, or the Director General, as

the case may be, the European regulatory authority

concerned may, in accordance with Article 34(2) of

the MCD, refer the matter to the EBA and request

its assistance in accordance with Article 19 of

Regulation (EU) No 1093/2010.

(5) Where Malta is the host Member State

and the MFSA and, or the Director General, as the

case may be, have clear and demonstrable grounds

for concluding that a European credit intermediary

acting within its territory under the freedom to

provide services is in breach of the obligations

arising from the measures adopted pursuant to the

provisions of these regulations transposing the

MCD, or that a European credit intermediary that

has a branch in Malta is in breach of the obligations

arising from the measures adopted pursuant to the

provisions of these regulations transposing the

MCD other than those specified in Article 34(2) of

the MCD, the MFSA shall refer those findings to

the European regulatory authority of the home

Member State concerned, which shall, in

accordance with Article 34(4) of the MCD, take

appropriate action.

(6) In the event that the European

regulatory authority of the home Member State

concerned fails to take any action in accordance

with Article 34(4) the MCD, or where, despite the

action taken by the European regulatory authority

of the home Member State concerned, the European

credit intermediary concerned persists in acting in a

manner that is clearly prejudicial to the interests of

Maltese consumers or orderly functioning of the

markets

(a)

the MFSA and, or the Director

General, as the case may be, shall take all

appropriate action needed to protect

consumers and ensure the proper functioning

of the markets, including by preventing the

defaulting European credit intermediary from

initiating any further transactions in Malta

Provided that prior to taking any

such action, the MFSA shall inform the

European regulatory authority of the home

Member State concerned

Provided further that the MFSA

shall inform the European Commission and

the EBA of any action taken by the MFSA

and, or the Director General, as the case may

be, in accordance with this paragraph without

undue delay;

(b)

the MFSA may refer the matter

to the EBA and request its assistance in

accordance with Article 19 of Regulation

(EU) No 1093/2010.

(7) Where Malta is the host Member State

and a European credit intermediary provides

services in Malta through the establishment of a

branch, the European regulatory authority of the

home Member State may, in accordance with

Article 34(5) of the MCD, in the exercise of its

responsibilities and after having informed the

MFSA, carry out on-site inspections in that branch

Provided that the MFSA shall forward

to the Director General any information received

from the European regulatory authority concerned

in accordance with Article 34(5) of the MCD.

(8) For the purposes of this regulation, the

Director General and the MFSA shall collaborate

closely and shall cooperate whenever necessary,

including by exchanging all the necessary

information in order for such competent authorities

to be able to fulfil their respective duties,

responsibilities and obligations.

22H. (1)

The MFSA shall cooperate with

European

regulatory

authorities

whenever

necessary for the purpose of carrying out its duties

under the provisions of the MCD, making use of its

powers, whether set out in these regulation or in

any other law.

(2) The MFSA shall render assistance to

European regulatory authorities and shall, in

particular, exchange information and cooperate in

any investigation or supervisory activities

Provided that in order to facilitate such

assistance, the MFSA shall take the necessary

administrative and organisational measures

Provided further that where a European

regulatory authority requests the cooperation of the

MFSA, in particular the exchange of information,

and the MFSA rejects the request or does not act

upon it within a reasonable time, the European

regulatory authority concerned may, in accordance

with Article 37 of the MCD, refer the situation to

the EBA and request the EBA’s assistance in

accordance with Article 19 of Regulation (EU) No

1093/2010.

(3) The MFSA shall communicate to the

European Commission and to the other Member

States its name and contact details as the authority

which, in accordance with regulation 3A(1), has

been designated as the single contact point for the

purposes of the MCD and to receive requests for

exchange of information or cooperation pursuant to

Article 36(1) of the MCD.

(4) The MFSA shall without undue delay

supply European regulatory authorities with the

information required for the purposes of carrying

out their duties set out in the measures adopted

pursuant to the MCD.

(5) The MFSA may, when exchanging

information with European regulatory authorities,

indicate at the time of communication that such

information must not be disclosed without its

express agreement

Provided that in such case, such

information may, in accordance with Article 36(3)

of the MCD be exchanged solely for the purposes

for which the MFSA gave its agreement

Provided further that the European

regulatory authority receiving this information

from the MFSA may, in accordance with Article

36(3) of the MCD, transmit such information

received to other authorities designated as

competent in its Member State in accordance with

Article 5 of the MCD, solely for the purposes for

which the MFSA gave its agreement, and shall not,

in accordance with Article 36(3) of the MCD,

transmit the information to other bodies or natural

or legal persons without the express agreement of

the MFSA, except in duly justified circumstances

Provided further that in the event of

such circumstances, the European regulatory

authority shall, in accordance with Article 36(3) of

the MCD, immediately inform the MFSA.

(6) Where the MFSA receives information

from a European regulatory authority and at the

time of the communication the European regulatory

authority concerned indicates that such information

must not be disclosed without its express

agreement, the MFSA may only exchange such

information solely for the purposes for which the

European regulatory authority concerned gave its

agreement

Provided that the MFSA may transmit

the information received to the Director General

solely for the purposes for which the European

regulatory authority concerned gave its agreement,

and shall not transmit the information to other

bodies or natural or legal persons without the

express agreement of the European regulatory

authority concerned, except in duly justified

circumstances

Provided further that in the event of

such circumstances, the MFSA shall immediately

inform the European regulatory authority that

supplied the information.

(7) The MFSA may refuse to act on a

request for cooperation in carrying out an

investigation or supervisory activity or to exchange

information as provided for in Article 36(3) of the

MCD only where

(a)

such an investigation, on-the-

spot verification, supervisory activity or

exchange of information might adversely

affect the sovereignty, security or public

policy of Malta;

(b)

judicial

proceedings

have

already been initiated in respect of the same

actions and the same persons before Maltese

authorities;

(c)

final judgement has already been

delivered in Malta, addressed in respect of the

same persons and the same actions

Provided that in the event of such a

refusal, the MFSA shall notify the requesting

European regulatory authority accordingly,

providing as detailed information as possible.

(8) For the purposes of this regulation, the

Director General and the MFSA shall collaborate

closely and shall cooperate whenever necessary,

including by exchanging all the necessary

information in order for the competent authorities

to be able to fulfil their respective duties,

responsibilities and obligations.

22I. (1)

Where a request for cooperation,

in particular the exchange of information, by the

MFSA to a European regulatory authority has been

rejected or has not been acted upon within a

reasonable time by the European regulatory

authority concerned, the MFSA may refer the

situation to the EBA and request the EBA’s

assistance in accordance with Article 19 of

Regulation (EU) No 1093/2010.

(2) Any binding decision made by the EBA

in accordance with Article 19 of Regulation (EU)

No 1093/2010 further to a request by the MFSA in

accordance with sub-regulation (1), or a request by

a European regulatory authority made in

accordance with Article 37 of the MCD, shall be

binding on the competent authorities and, in

accordance with Article 37 of the MCD, on the

European regulatory authority concerned and on

any other authorities designated as competent in the

Member State concerned in accordance with

Article 5 of the MCD, regardless of whether such

authorities are members of the EBA or not.".

Regulation 23 of the principal regulations shall be

amended as follows

(a)

sub-regulation (1) thereof shall be substituted by

the following

"(1) Without prejudice to the provisions of

regulation 23A, the Director General may impose an

administrative fine, issue such order, or decision or take

such measure as may be deemed appropriate in terms of

the Act, upon any person who contravenes or fails to

comply with any of the provisions of these regulations

Provided that the MFSA shall not impose an

administrative fine in respect of the same breach."; and

(b)

in the second proviso to paragraph (a) of sub-

regulation (4) thereof, for the words "under the home loan

agreement" there shall be substituted the words "under the

credit agreement".

Immediately after regulation 23 of the principal Adds new

regulations there shall be added the following new regulations

23A. (1)

Without prejudice to the

provisions of regulation 23, where a credit

intermediary fails to comply with any of the

conditions imposed in an admission, and, or where

the MFSA is satisfied that a person’s conduct

amounts to a breach of any of the provisions of

these regulations transposing the MCD, or any

Credit Intermediaries’ Rules issued thereunder, or

such person has failed to comply with a directive

issued by the MFSA under these regulations, the

MFSA may, by notice in writing and without

recourse to a court hearing, impose on such person

an administrative fine of not less than one thousand

euro (€1,000) and not exceeding forty-five

thousand euro (€45,000)

Provided that in determining the amount

of the administrative fine referred to in this sub-

regulation, the MFSA shall be guided by the

considerations referred to in regulation 23(4)

Provided further that the Director

General shall not impose an administrative fine in

respect of the same act or omission.

(2) Where the MFSA decides to impose an

administrative fine, it shall notify the person on

whom the fine is being imposed by means of a

notice in writing.

(3) Where the person upon whom the notice

referred to in sub-regulation (2) is served -

(a)

fails to pay to the MFSA the

amount of the administrative fine within a

period of thirty days of the service of the

notice, and fails to appeal from the decision

of the MFSA to the Financial Services

Tribunal; or

(b)

appeals to the Financial Services

Tribunal and fails within a period of fifteen

days from the decision of the said Tribunal to

pay the administrative fine as confirmed or as

reduced by that Tribunal,

then, in every case, the amount of the

administrative fine, as originally imposed or as

reduced, as the case may be, shall be due to the

MFSA as a civil debt, and the provisions of sub-

regulation (4) shall apply.

(4) A notice as is referred to in sub-

regulation (2), or the decision of the Financial

Services Tribunal, as the case may be, shall upon

the service by judicial act of a copy thereof on the

person indicated in the notice, constitute an

executive title for all effects and purposes of Title

VII of Part I of Book Second of the Code of

Organization and Civil Procedure.

23B. Any person who feels aggrieved by a

decision and, or measure taken by the MFSA

pursuant to these regulations or any Credit

Intermediaries’ Rules issued thereunder, may

appeal against the decision and, or measure to the

Financial Services Tribunal within such period and

under such conditions as established under the

Malta Financial Services Authority Act.

23C. (1)

The MFSA may publish, on its

official website and, or in any other media as it

considers appropriate, any administrative fines

imposed under the provisions of these regulations.

Such publications shall include information on the

type and nature of the breach and the identity of the

person on whom the administrative fine is imposed,

without undue delay after that person is informed

of those penalties

Provided that in cases where an appeal

has been filed by the person on whom such

administrative fine or fines have been imposed, the

MFSA shall, without undue delay, also publish on

its official website and in any other media as it

considers appropriate, information on the status of

the appeal and the outcome thereof.

(2) Information published in terms of this

regulation shall remain on the official website of

the MFSA for a period of not less than five years.

Personal data shall be retained on the official

website of the MFSA and in any other media it

considers appropriate only for the period necessary,

in accordance with the provisions of Maltese

legislation on data protection.".

Regulation 24 of the principal regulations shall be Amends

amended as follows

(a)

sub-regulation (1) thereof shall be substituted by

the following

"(1) The provisions of these regulations cannot be

circumvented in a way which could lead to consumers

losing the protection granted by these regulations as a

result of the way in which credit agreements are

formulated, in particular by integrating credit agreements

into agreements, the character or purpose of which would

make it possible to avoid the application of those

measures."; and

(b)

sub-regulation (3) thereof shall be substituted by

the following

"(3) Notwithstanding any provision in the credit

agreement to the effect that the applicable law to the credit

agreement shall be the law of a non-Member State, the

protection granted by these regulations shall continue to

apply where the credit agreement has a close link with

Malta or any other Member State.".

Immediately after regulation 24 of the principal Adds new

regulations there shall be added the following new regulation

24A. (1)

The Director General shall

ensure that appropriate and effective complaints

and redress procedures are established for the out

of-court settlement of consumer disputes with

creditors and credit intermediaries in relation to

credit agreements, using existing bodies where

appropriate. The Director General shall also ensure

that such procedures are applicable to creditors and

credit intermediaries and cover the activities of

appointed representatives.

(2) The bodies responsible for the out-of-

court settlement of consumer disputes to shall

cooperate with bodies responsible for the out-of-

court settlement of consumer disputes in other

Member State so that cross-border disputes

concerning credit agreements can be resolved.".

Immediately after regulation 25 of the principal

regulations there shall be added the following new regulation

25A. (1)

These regulations shall not apply

to credit agreements existing before the coming

into force of these regulations.

(2) Credit intermediaries already carrying

out credit intermediation activities in terms of the

definition "credit intermediary" in regulation 2

before the coming into force of these regulations

and which have not yet been admitted in terms of

these regulations may continue to carry out those

activities in compliance with national law until 21

March 2017

Provided that where a Maltese credit

intermediary relies on this derogation, unless it also

satisfies the necessary legal requirements of the

host Member States, it may only perform its

activities in Malta.

(3) Creditors and credit intermediaries

performing activities regulated by these regulations

before 20 March 2014 shall comply with the

national law transposing regulation 9 by 21 March

2017.".

The First Schedule to the principal regulations is hereby

The Second Schedule to the principal regulations shall be

re-numbered as the First Schedule, and shall be substituted by the

"FIRST SCHEDULE

[Regulation 7(1) and (2)]

EUROPEAN STANDARDISED INFORMATION SHEET (ESIS)

PART A

The text in this model shall be reproduced as such in the ESIS.

Indications between square brackets shall be replaced with the

corresponding information. Instructions for the creditor or, where

applicable, credit intermediary on how to complete the ESIS are

provided in Part B.

Wherever the words ‘where applicable’ are indicated, the

creditor shall provide the information required if it is relevant to the

credit agreement. Where the information is not relevant, the creditor

shall delete the information in question or the entire section (for

example, in cases where the section is not applicable). Where the

entire section is deleted, the numbering of the ESIS sections shall be

adjusted accordingly.

The information below shall be provided in a single document.

The font used shall be clearly readable. Bold font, shading or larger

font sizes shall be used for the information elements to be

highlighted. All applicable risk warnings shall be highlighted.

ESIS Model

(Introductory text)

This document was produced for [name of consumer] on

[current date].

This document was produced on the basis of the information

that you have provided so far and on the current financial market

conditions.

The information below remains valid until [validity date],

(where applicable) apart from the interest rate and other costs. After

that date, it may change in line with market conditions.

(Where applicable) This document does not constitute an

obligation for [name of creditor] to grant you a loan.

1. Lender

[Name]

[Telephone number]

[Geographical address]

(Optional) [E-mail address]

(Optional) [Fax number]

(Optional) [Web address]

(Optional) [Contact person/point]

(Where applicable information as to whether advisory services

are being provided:) [(We recommend, having assessed your needs

and circumstances, that you take out this mortgage./We are not

recommending a particular mortgage for you. However, based on

your answers to some questions, we are giving you information about

this mortgage so that you can make your own choice.)]

2. (Where applicable) Credit intermediary

[Name]

[Telephone number]

[Geographical address]

(Optional) [E-mail address]

(Optional) [Fax number]

(Optional) [Web address]

(Optional) [Contact person/point]

(Where applicable [information as to whether advisory services

are being provided]) [(We recommend, having assessed your needs

and circumstances, that you take out this mortgage./We are not

recommending a particular mortgage for you. However, based on

your answers to some questions, we are giving you information about

this mortgage so that you can make your own choice.)]

[Remuneration]

3. Main features of the loan

Amount and currency of the loan to be granted: [value]

[currency]

(Where applicable) This loan is not in [national currency of the

borrower].

(Where applicable) The value of your loan in [national currency

of the borrower] could change.

(Where applicable) For example, if the value of [national

currency of the borrower] fell by 20% relative to [credit currency],

the value of your loan would increase to [insert amount in national

currency of the borrower]. However, it could be more than this if the

value of [national currency of the borrower] falls by more than 20 %.

(Where applicable) The maximum value of your loan will be

[insert amount in national currency of the borrower]. (Where

applicable) You will receive a warning if the credit amount reaches

[insert amount in national currency of the borrower]. (Where

applicable) You will have the opportunity to [insert right to

renegotiate foreign currency loan or right to convert loan into

[relevant currency] and conditions].

Duration of the loan: [duration]

[Type of loan]

[Type of applicable interest rate]

Total amount to be reimbursed

This means that you will pay back [amount] for every [unit of

the currency] borrowed.

(Where applicable) [This/Part of this] is an interest-only loan.

You will still owe [insert amount of loan on an interest- only basis] at

the end of the mortgage term.

(Where applicable) Value of the property assumed to prepare

this information sheet: [insert amount]

(Where applicable) Maximum available loan amount relative to

the value of the property [insert ratio] or Minimum value of the

property required to borrow the illustrated amount [insert amount]

(Where applicable) [Security]

4. Interest rate and other costs

The annual percentage rate of charge (APRC) is the total cost of

the loan expressed as an annual percentage. The APRC is provided to

help you to compare different offers.

The APRC applicable to your loan is [APRC].

It comprises

Interest rate [value in percentage or, where applicable,

indication of a reference rate and percentage value of creditor’s

spread]

[Other components of the APRC]

Costs to be paid on a one-off basis

(Where applicable) You will need to pay a fee to register the

mortgage. [Insert amount of fee where known or basis for

calculation.]

Costs to be paid regularly

(Where applicable) This APRC is calculated using assumptions

regarding the interest rate.

(Where applicable) Because [part of] your loan is a variable

interest rate loan, the actual APRC could be different from this APRC

if the interest rate for your loan changes. For example, if the interest

rate rose to [scenario as described in Part B], the APRC could

increase to [insert illustrative APRC corresponding to the scenario].

(Where applicable) Please note that this APRC is calculated on

the basis that the interest rate remains at the level fixed for the initial

period throughout the duration of the contract.

(Where applicable) The following costs are not known to the

lender and are therefore not included in the APRC: [Costs]

(Where applicable) You will need to pay a fee to register the

mortgage.

Please make sure that you are aware of all other taxes and costs

associated with your loan.

5. Frequency and number of payments

Repayment frequency: [frequency]

Number of payments: [number]

6. Amount of each instalment

[Amount] [currency]

Your income may change. Please consider whether you will still

be able to afford your [frequency] repayment instalments if your

income falls.

(Where applicable) Because [this/part of this] is an interest-only

loan you will need to make separate arrangements to repay the [insert

amount of loan on an interest-only basis] you will owe at the end of

the mortgage term. Remember to add any extra payments you will

need to make to the instalment amount shown here.

(Where applicable) The interest rate on [part of] this loan can

change. This means the amount of your instalments could increase or

decrease. For example, if the interest rate rose to [scenario as

described in Part B] your payments could increase to [insert

instalment amount corresponding to the scenario].

(Where applicable) The value of the amount you have to pay in

[national currency of the borrower] each [frequency of instalment]

could change. (Where applicable) Your payments could increase to

[insert maximum amount in national currency of the borrower] each

[insert period]. (Where applicable) For example, if the value of

[national currency of the borrower] fell by 20 % relative to [credit

currency] you would have to pay an extra [insert amount in national

currency of the borrower] each [insert period]. Your payments could

increase by more than this.

(Where applicable) The exchange rate used for converting your

repayment in [credit currency] to [national currency of the borrower]

will be the rate published by [name of institution publishing exchange

rate] on [date] or will be calculated on [date] using [insert name of

benchmark or method of calculation].

(Where applicable) [Details on tied savings products, deferred-

interest loans]

7. (Where applicable) Illustrative repayment table

This table shows the amount to be paid every [frequency].

The instalments (column [relevant no.]) are the sum of interest

to be paid (column [relevant no.]), where applicable, capital paid

(column [relevant no.]) and, where applicable, other costs (column

[relevant no.]). (Where applicable) The costs in the other costs

column relate to [list of costs]. Outstanding capital (column [relevant

no.]) is the amount of the loan that remains to be reimbursed after

each instalment.

[Table]

8. Additional obligations

The borrower must comply with the following obligations in

order to benefit from the lending conditions described in this

document.

[Obligations]

(Where applicable) Please note that the lending conditions

described in this document (including the interest rate) may change if

these obligations are not complied with.

(Where applicable) Please note the possible consequences of

terminating at a later stage any of the ancillary services relating to the

loan

[Consequences]

9. Early repayment

You have the possibility to repay this loan early, either fully or

partially.

(Where applicable) [Conditions]

(Where applicable) Exit charge: [insert amount or, where not

possible, the method of calculation]

(Where applicable) Should you decide to repay this loan early,

please contact us to ascertain the exact level of the exit charge at that

moment.

10. Flexible features

(Where applicable) [Information on portability/subrogation]

You have the possibility to transfer this loan to another [lender][or]

[property]. [Insert conditions]

(Where applicable) You do not have the possibility to transfer

this loan to another [lender] [or] [property].

(Where applicable) Additional features: [insert explanation of

additional features listed in Part B and, optionally, any other features

offered by the lender as part of the credit agreement not referred to in

previous sections].

11. Other rights of the borrower

(Where applicable) You have [length of reflection period] after

[point in time when the reflection period begins] to reflect before

committing yourself to taking out this loan. (Where applicable) Once

you have received the credit contract from the lender, you may not

accept it before the end of [length of reflection period].

(Where applicable) For a period of [length of withdrawal

period] after [point in time when the withdrawal period begins] you

may exercise your right to cancel the agreement. [Conditions] [Insert

procedure]

(Where applicable) You may lose your right to cancel the

agreement if, during that period, you buy or sell a property connected

to this credit agreement.

(Where applicable) Should you decide to exercise your right of

withdrawal [from the credit agreement], please verify whether you

will remain bound by your other obligations relating to the loan

[including the ancillary services relating to the loan] [, referred to in

Section 8].

12. Complaints

If you have a complaint please contact [insert internal contact

point and source of information on procedure].

(Where applicable) Maximum time for handling the complaint

[period of time]

(Where applicable) [If we do not resolve the complaint to your

satisfaction internally,] you can also contact: [insert name of external

body for out-of-court complaints and redress] (Where applicable) or

you can contact FIN-NET for details of the equivalent body in your

own country.

13. Non-compliance with the commitments linked to the loan

consequences for the borrower

[Types of non-compliance]

[Financial and/or legal consequences]

Should you encounter difficulties in making your [frequency]

payments, please contact us straight away to explore possible

solutions.

(Where applicable) As a last resort, your home may be

repossessed if you do not keep up with payments.

(Where applicable)

14. Additional information

(Where applicable) [Indication of the law applicable to the

credit contract].

(Where the lender intends to use a language different from the

language of the ESIS) Information and contractual terms will be

supplied in [language]. With your consent, we intend to communicate

in [language/s] during the duration of the credit agreement.

[Insert statement on right to be provided with or offered, as

applicable, a draft credit agreement]

15. Supervisor

This lender is supervised by [Name(s), and web address(es) of

supervisory authority/ies]

(Where applicable) This credit intermediary is supervised by

[Name and web address of supervisory authority].

PART B

Instructions to complete the ESIS

In completing the ESIS, at least the following instructions shall

be followed. Member States may however elaborate or further specify

the instructions for completing the ESIS.

Section ‘Introductory text’

(1) The validity date shall be properly highlighted. For the

purpose of this section, the ‘validity date’ means the length of time

the information, e.g. the borrowing rate, contained in the ESIS will

remain unchanged and will apply should the creditor decide to grant

the credit within this period of time. Where the determination of the

applicable borrowing rate and other costs depends on the results of

the selling of underlying bonds, the eventual borrowing rate and other

costs may be different from those stated. In those circumstances only,

it shall be stipulated that the validity date does not apply to the

borrowing rate and other costs by adding the words: ‘apart from the

interest rate and other costs’.

Section ‘1. Lender’

(1) Name, telephone number, and geographical address of the

creditor shall refer to the contact information that the consumer may

use for future correspondence.

(2) Information on the e-mail address, fax number, web

address and contact person/point is optional.

(3) In line with Article 3 of Directive 2002/65/EC, where the

transaction is being offered at a distance, the creditor shall indicate,

where applicable, the name and geographical address of its

representative in the Member State of residence of the consumer.

Indication of the telephone number, e-mail address and web address

of the representative of the credit provider is optional.

(4) Where Section 2 is not applicable, the creditor shall inform

the consumer whether advisory services are being provided and on

what basis using the wording in Part A.

(Where applicable) Section ‘2. Credit intermediary’

Where the product information is being provided to the

consumer by a credit intermediary, that intermediary shall include the

following information

(1) Name, telephone number and geographical address of the

credit intermediary shall refer to the contact information that the

consumer may use for future correspondence.

(2) Information on the e-mail address, fax number, web

address and contact person/point is optional.

(3) The credit intermediary shall inform the consumer whether

advisory services are being provided and on what basis using the

wording in Part A.

(4) An explanation of how the credit intermediary is being

remunerated. Where it is receiving commission from a creditor, the

amount and, where different from the name in Section 1, the name of

the creditor shall be provided.

Section ‘3. Main features of the loan’

(1) This section shall clearly explain the main characteristics

of the credit, including the value and currency and the potential risks

associated with the borrowing rate, including the ones referred to in

sub-paragraph (8), and amortisation structure.

(2) Where the credit currency is different from the national

currency of the consumer, the creditor shall indicate that the

consumer will receive a regular warning at least when the exchange

rate fluctuates by more than 20%, where applicable the right to

convert the currency of the credit agreement or to the possibility to

renegotiate the conditions and any other arrangements available to the

consumer to limit their exposure to exchange rate risk. Where there is

a provision in the credit agreement to limit the exchange rate risk, the

creditor shall indicate the maximum amount the consumer could have

to pay back. Where there is no provision in the credit agreement to

limit the exchange rate risk to which the consumer is exposed to a

fluctuation in the exchange rate of less than 20%, the creditor shall

indicate an illustration of the effect of a 20% fall in the value of

consumer’s national currency relative to the credit currency on the

value of the credit.

(3) The duration of the credit shall be expressed in years or

months, whichever is the most relevant. Where the duration of the

credit can vary during the lifetime of the contract, the creditor shall

explain when and under which conditions this can occur. Where the

credit is open-ended, for example, for a secured credit card, the

creditor shall clearly state that fact.

(4) The type of credit shall be clearly indicated (e.g. mortgage

credit, home loan, secured credit card). The description of the type of

credit shall clearly indicate how the capital and the interest shall be

reimbursed during the life of the credit (i.e. the amortisation

structure), specifying clearly whether the credit agreement is on

capital repayment or interest-only basis, or a mixture of the two.

(5) Where all or part of the credit is an interest-only credit, a

statement clearly indicating that fact shall be inserted prominently at

the end of this section using the wording in Part A.

(6) This section shall explain whether the borrowing rate is

fixed or variable and, where applicable, the periods during which it

will remain fixed; the frequency of subsequent revisions and the

existence of limits to the borrowing rate variability, such as caps or

floors.

The formula used to revise the borrowing rate and its

different components (e.g. reference rate, interest rate spread) shall be

explained. The creditor shall indicate, e.g. by means of a web address,

where further information on the indices or rates used in the formula

can be found, e.g. Euribor or central bank reference rate.

(7)

If different borrowing rates apply in different

circumstances, the information shall be provided on all applicable

rates.

(8) The ‘total amount to be reimbursed’ corresponds to the

total amount payable by the consumer. It shall be shown as the sum of

the credit amount and the total cost of the credit to the consumer.

Where the borrowing rate is not fixed for the duration of the contract,

it shall be highlighted that this amount is illustrative and may vary in

particular in relation with the variation in the borrowing rate.

(9) Where the credit will be secured by a mortgage on the

immovable property or another comparable security or by a right

related to immovable property, the creditor shall draw the consumer’s

attention to this. Where applicable the creditor shall indicate the

assumed value of the immovable property or other security used for

the purpose of preparing this information sheet.

(10) The creditor shall indicate, where applicable, either

(a)

‘maximum available loan amount relative to the

value of the property’, indicating the loan-to-value ratio. This

ratio is to be accompanied by an example in absolute terms of

the maximum amount that can be borrowed for a given property

value; or

(b)

the ‘minimum value of the property required by

the creditor to lend the illustrated amount’.

(11) Where credits are multi-part credits (e.g. concurrently part

fixed rate, part variable rate), this shall be reflected in the indication

of the type of credit and the required information shall be given for

each part of the credit.

Section ‘4. Interest rate’ and other costs

(1) The reference to ‘interest rate’ corresponds to the

borrowing rate or rates.

(2) The borrowing rate shall be mentioned as a percentage

value. Where the borrowing rate is variable and based on a reference

rate the creditor may indicate the borrowing rate by stating a

reference rate and a percentage value of creditor’s spread. The

creditor shall however indicate the value of the reference rate valid on

the day of issuing the ESIS.

Where the borrowing rate is variable the information shall

include: (a) the assumptions used to calculate the APRC; (b) where

relevant, the applicable caps and floors and (c) a warning that the

variability could affect the actual level of the APRC. In order to

attract the consumer’s attention the font size used for the warning

shall be bigger and shall figure prominently in the main body of the

ESIS. The warning shall be accompanied by an illustrative example

on the APRC. Where there is a cap on the borrowing rate, the

example shall assume that the borrowing rate rises at the earliest

possible opportunity to the highest level foreseen in the credit

agreement. Where there is no cap the example shall illustrate the

APRC at the highest borrowing rate in at least the last 20 years, or

where the underlying data for the calculation of the borrowing rate is

available for a period of less than 20 years the longest period for

which such data is available, based on the highest value of any

external reference rate used in calculating the borrowing rate where

applicable or the highest value of a benchmark rate specified by a

competent authority or EBA where the creditor does not use an

external reference rate. Such requirement shall not apply to credit

agreements where the borrowing rate is fixed for a material initial

period of several years and may then be fixed for a further period

following negotiation between the creditor and the consumer. For

credit agreements where the borrowing rate is fixed for a material

initial period of several years and may then be fixed for a further

period following negotiation between the creditor and the consumer,

the information shall include a warning that the APRC is calculated

on the basis of the borrowing rate for the initial period. The warning

shall be accompanied by an additional, illustrative APRC calculated

in accordance with regulation 21(4). Where credits are multi-part

credits (e.g. concurrently part fixed rate, part variable rate), the

information shall be given for each part of the credit.

(3) In the section on ‘other components of the APRC’ all the

other costs contained in the APRC shall be listed, including one-off

costs such as administration fees, and regular costs, such as annual

administration fees. The creditor shall list each of the costs by

category (costs to be paid on a one-off basis, costs to be paid regularly

and included in the instalments, costs to be paid regularly but not

included in the instalments), indicating their amount, to whom they

are to be paid and when. This does not have to include costs incurred

for breaches of contractual obligations. Where the amount is not

known, the creditor shall provide an indication of the amount if

possible, or if not possible, how the amount will be calculated and

specify that the amount provided is indicative only. Where certain

costs are not included in the APRC because they are unknown to the

creditor, this shall be highlighted.

Where the consumer has informed the creditor of one or more

components of his preferred credit, such as the duration of the credit

agreement and the total amount of credit, the creditor shall, where

possible, use those components; if a credit agreement provides

different ways of drawdown with different charges or borrowing rates

and the creditor uses the assumptions set out in Part II of Annex I, it

shall indicate that other drawdown mechanisms for this type of credit

agreement may result in a higher APRC. Where the conditions for

drawdown are used for calculating the APRC, the creditor shall

highlight the charges associated with other drawdown mechanisms

that are not necessarily the ones used in calculating the APRC.

(4) Where a fee is payable for registration of the mortgage or

comparable security that shall be disclosed in this section with the

amount, where known, or where this is not possible the basis for

determining the amount. Where the fees are known and included in

the APRC the existence and amount of the fee shall be listed under

‘Costs to be paid on a one-off basis’. Where the fees are not known to

the creditor and therefore not included in the APRC the existence of

the fee shall be clearly mentioned in the list of costs which are not

known to the creditor. In either case the standardised wording in Part

A shall be used under the appropriate heading.

Section ‘5. Frequency and number of payments’

(1) Where payments are to be made on a regular basis, the

frequency of payments shall be indicated (e.g. monthly). Where the

frequency of payments will be irregular, this shall be clearly

explained to the consumer.

(2) The number of payments indicated shall cover the whole

duration of the credit.

Section ‘6. Amount of each instalment’

(1) The credit currency and currency of the instalments shall

be clearly indicated.

(2) Where the amount of the instalments may change during

the life of the credit, the creditor shall specify the period during which

that initial instalment amount will remain unchanged and when and

how frequently afterwards it will change.

(3) Where all or part of the credit is an interest-only credit, a

statement clearly indicating that fact, shall be inserted prominently at

the end of this section using the wording in Part A.

If there is a requirement for the consumer to take out a tied

savings product as a condition for being granted an interest-only

credit secured by a mortgage or another comparable security, the

amount and frequency of any payments for this product shall be

provided.

(4) Where the borrowing rate is variable the information shall

include a statement indicating that fact, using the wording in Part A

and an illustration of a maximum instalment amount. Where there is a

cap, the illustration shall show the amount of the instalments if the

borrowing rate rises to the level of the cap. Where there is no cap, the

worst case scenario shall illustrate the level of instalments at the

highest borrowing rate in the last 20 years, or where the underlying

data for the calculation of the borrowing rate is available for a period

of less than 20 years the longest period for which such data is

available, based on the highest value of any external reference rate

used in calculating the borrowing rate where applicable, or the

highest value of a benchmark rate specified by a competent authority

or EBA where the creditor does not use an external reference rate.

The requirement to provide an illustrative example shall not apply to

credit agreements where the borrowing rate is fixed for a material

initial period of several years and may then be fixed for a further

period following negotiation between the creditor and the consumer.

Where credits are multi-part credits (e.g. concurrently part fixed rate,

part variable rate), the information shall be given for each part of the

credit, and in total.

(5) (Where applicable) Where the credit currency is different

from the consumer’s national currency or where the credit is indexed

to a currency which is different from the consumer’s national

currency, the creditor shall include a numerical example clearly

showing how changes to the relevant exchange rate may affect the

amount of the instalments using the wording in Part A. That example

shall be based on a 20% reduction in the value of the consumer’s

national currency together with a prominent statement that the

instalments could increase by more than the amount assumed in that

example. Where there is a cap which limits that increase to less than

20%, the maximum value of the payments in the consumer’s currency

shall be given instead and the statement on the possibility of further

increases omitted.

(6) Where the credit is fully or partly a variable rate credit and

paragraph 3 applies, the illustration in paragraph 5 shall be given on

the basis of the instalment amount referred to in paragraph 1.

(7) Where the currency used for the payment of instalments is

different from the credit currency or where the amount of each

instalment expressed in the consumer’s national currency depends on

the corresponding amount in a different currency, this section shall

indicate the date at which the applicable exchange rate is calculated

and either the exchange rate or the basis on which it will be calculated

and the frequency of their adjustment. Where applicable such

indication shall include the name of institution publishing the

exchange rate.

(8) Where the credit is a deferred-interest credit under which

interest due is not fully repaid by the instalments and is added to the

total amount of credit outstanding, there shall be an explanation of

how and when deferred interest is added to the credit as a cash

amount; and what the implications are for the consumer in terms of

their remaining debt.

Section ‘7. Illustrative repayment table’

(1) This section shall be included where the credit is a deferred

interest credit under which interest due is not fully repaid by the

instalments and is added to the total amount of credit outstanding or

where the borrowing rate is fixed for the duration of the credit

agreement. Member States may provide that the illustrative

amortisation table is compulsory in other cases.

Where the consumer has the right to receive a revised

amortisation table, this shall be indicated along with the conditions

under which the consumer has that right.

(2) Member States may require that where the borrowing rate

may vary during the lifetime of the credit, the creditor shall indicate

the period during which that initial borrowing rate will remain

unchanged.

(3) The table to be included in this section shall contain the

following columns: ‘repayment schedule’ (e.g. month 1, month 2,

month 3), ‘amount of the instalment’, ‘interest to be paid per

instalment’, ‘other costs included in the instalment’ (where relevant),

‘capital repaid per instalment’ and ‘outstanding capital after each

instalment’.

(4) For the first repayment year the information shall be given

for each instalment and a subtotal shall be indicated for each of the

columns at the end of that first year. For the following years, the

detail can be provided on an annual basis. An overall total row shall

be added at the end of the table and shall provide the total amounts for

each column. The total cost of the credit paid by the consumer (i.e.

the overall sum of the ‘amount of the instalment’ column) shall be

clearly highlighted and presented as such.

(5) Where the borrowing rate is subject to revision and the

amount of the instalment after each revision is unknown, the creditor

may indicate in the amortisation table the same instalment amount for

the whole credit duration. In such a case, the creditor shall draw that

fact to the attention of the consumer by visually differentiating the

amounts which are known from the hypothetical ones (e.g. using a

different font, borders or shading). In addition, a clearly legible text

shall explain for which periods the amounts represented in the table

may vary and why.

Section ‘8. Additional obligations’

(1) The creditor shall refer in this section to obligations such

as the obligation to insure the immovable property, to purchase life

insurance, to have a salary paid into an account with the creditor or to

buy any other product or service. For each obligation, the creditor

shall specify towards whom and by when the obligation needs to be

fulfilled.

(2) The creditor shall specify the duration of the obligation,

e.g. until the end of the credit agreement. The creditor shall specify

for each obligation any costs to be paid by the consumer, which are

not included in the APRC.

(3) The creditor shall state whether it is compulsory for the

consumer to hold any ancillary services to obtain the credit on the

stated terms, and if so whether the consumer is obliged to purchase

them from the creditor’s preferred supplier or whether they may be

purchased from a provider of consumer’s choice. Where such

possibility is conditional on the ancillary services meeting certain

minimum characteristics, such characteristics shall be described in

this section.

Where the credit agreement is bundled with other products the

creditor shall state the key features of those other products and clearly

state whether the consumer has a right to terminate the credit

agreement or the bundled products separately, the conditions for and

implications of doing so, and, where applicable, of the possible

consequences of terminating the ancillary services required in

connection with the credit agreement.

Section ‘9. Early repayment’

(1) The creditor shall indicate under what conditions the

consumer can repay the credit early, either fully or partially.

(2) In the section on exit charges the creditor shall draw the

consumer’s attention to any exit charge or other costs payable on

early repayment in order to compensate the creditor and where

possible indicate their amount. In cases where the amount of

compensation would depend on different factors, such as the amount

repaid or the prevailing interest rate at the moment of the early

repayment, the creditor shall indicate how the compensation will be

calculated and provide the maximum amount that the charge might

be, or where this is not possible, an illustrative example in order to

demonstrate to the consumer the level of compensation under

different possible scenarios.

Section ‘10. Flexible features’

(1) Where applicable, the creditor shall explain the possibility

to and conditions for transferring the credit to another creditor or

immovable property.

(2) (Where appropriate) Additional features: Where the

product contains any of the features listed in paragraph 5, this section

must list these features and provide a brief explanation of: the

circumstances in which the consumer can use the feature; any

conditions attached to the feature; if the feature being part of the

credit secured by a mortgage or comparable security means that the

consumer loses any statutory or other protections usually associated

with the feature; and the firm providing the feature (if not the

creditor).

(3) If the feature contains any additional credit, then this

section must explain to the consumer: the total amount of credit

(including the credit secured by the mortgage or comparable

security); whether the additional credit is secured or not; the relevant

borrowing rates; and whether it is regulated or not. Such additional

credit amount shall either be included in the original creditworthiness

assessment or, if it is not, this section shall make clear that the

availability of the additional amount is dependent on a further

assessment of the consumer’s ability to repay.

(4) If the feature involves a savings vehicle, the relevant

interest rate must be explained.

(5) The possible additional features are: ‘Overpayments/

Underpayments’ [paying more or less than the instalment ordinarily

required by the amortisation structure]; ‘Payment holidays’ [periods

where the consumer is not required to make payments]; ‘Borrow

back’ [ability for the consumer to borrow again funds already drawn

down and repaid]; ‘Additional borrowing available without further

approval’; ‘Additional secured or unsecured borrowing’ [in

accordance with paragraph 3 above]; ‘Credit card’; ‘Linked current

account’; and ‘Linked savings account’.

(6) The creditor may include any other features offered by the

creditor as part of the credit agreement not mentioned in previous

sections.

Section ‘11. Other rights of the borrower’

(1) The creditor shall clarify the right(s) of e.g. withdrawal or

reflection and where applicable other rights such as, portability

(including subrogation) that exist, specify the conditions to which

this/these right(s) is subject, the procedure that the consumer will

need to follow in order to exercise this/these right(s), inter alia, the

address to which the notification of withdrawal shall be sent, and the

corresponding fees (where applicable).

(2) Where a reflection period or right of withdrawal for the

consumer applies this shall be clearly mentioned.

(3) In line with Article 3 of Directive 2002/65/EC, where the

transaction is being offered at a distance, the consumer shall be

informed of the existence or absence of a right of withdrawal.

Section ‘12. Complaints’

(1) This Section shall indicate the internal contact point [name

of the relevant department] and a means of contacting them to

complain [Geographical address] or [Telephone number] or [Contact

person:] [contact details] and a link to the complaints procedure on

the relevant page of a website or similar information source.

(2) It shall indicate the name of the relevant external body for

out-of-court complaints and redress and where using the internal

complaint procedure is a precondition for access to that body, indicate

that fact using the wording in Part A.

(3) In the case of credit agreements with a consumer who is

resident in another Member State, the creditor shall refer to the

existence of FIN-NET (http://ec.europa.eu/internal_market/fin-net/).

Section ‘13. Non-compliance with the commitments linked to

the credit: consequences for the borrower’

(1) Where non-observance of any of the consumer’s

obligations linked to the credit may have financial or legal

consequences for the consumer, the creditor shall describe in this

section the different main cases (e.g. late payments/ default, failure to

respect the obligations set out in Section 8 ‘Additional obligations’)

and indicate where further information could be obtained.

(2) For each of those cases, the creditor shall specify, in clear,

easy comprehensible terms, the sanctions or consequences to which

they may give rise. Reference to serious consequences shall be

highlighted.

(3) Where the immovable property used to secure the credit

may be returned or transferred to the creditor, if the consumer does

not comply with the obligations, this section shall include a statement

indicating that fact, using the wording in Part A.

Section ‘14. Additional information’

(1) In the case of distance marketing, this section will include

any clause stipulating the law applicable to the credit agreement or

the competent court.

(2) Where the creditor intends to communicate with the

consumer during the life of the contract in a language different from

the language of the ESIS that fact shall be included and the language

of communication named. This is without prejudice to sub-paragraph

(g) of sub-paragraph 3 of paragraph 1 of Article 3 of Directive 2002/

65/EC.

(3) The creditor or credit intermediary shall state the

consumer’s right to be provided with or offered, as applicable, a copy

of the draft credit agreement at least once an offer binding on the

creditor has been made.

Section ‘15. Supervisor’

(1) The relevant authority or authorities for the supervision of

the pre-contractual stage of lending shall be indicated.".

The Third Schedule to the principal regulations shall be Amends the

Third Schedule

amended as follows

to the principal

regulations.

(a)

for the words "Third Schedule" there shall be

substituted the words "Second Schedule";

(b)

immediately after paragraph (c) in Part I of thereof,

there shall be added the following

"Where intervals between dates used in the

calculations cannot be expressed as a whole number of

weeks, months or years, the intervals shall be expressed as

a whole number of one of those periods in combination

with a number of days. Where using days

(i) every day shall be counted, including

weekends and holidays;

(ii) equal periods and then days shall be

counted backwards to the date of the initial

drawdown;

(iii) the length of the period of days shall be

obtained excluding the first day and including the

last day and shall be expressed in years by dividing

this period by the number of days (365 or 366 days)

of the complete year counted backwards from the

last day to the same day of the previous year.";

(c)

in paragraph (e) in Part I thereof, for the words

"periods 1 to k" there shall be substituted the words "periods 1

to n";

(d)

paragraphs (d) to (i) of Part II thereof shall be

substituted by the following

"(d) If different borrowing rates and charges are

offered for a limited period or amount, the highest

borrowing rate and charges shall be deemed to be the

borrowing rate and charges for the whole duration of the

credit agreement.

(e) For credit agreements for which a fixed

borrowing rate is agreed in relation to the initial period, at

the end of which a new borrowing rate is determined and

subsequently periodically adjusted according to an agreed

indicator or internal reference rate the calculation of the

APRC shall be based on the assumption that, at the end of

the fixed borrowing rate period, the borrowing rate is the

same as at the time of calculation of the APRC, based on

the value of the agreed indicator or internal reference rate

at that time, but is not less than the fixed borrowing rate.

(f) If the ceiling applicable to the credit has not

yet been agreed, that ceiling is assumed to be EUR 170

000. In the case of credit agreements - other than

contingent liabilities or guarantees - the purpose of which

is not to acquire or retain a right in immovable property or

land, overdrafts, deferred debit cards or credit cards this

ceiling is assumed to be EUR 1,500.

(g) In the case of credit agreements other than

overdrafts, bridging loans, shared equity credit

agreements, contingent liabilities or guarantees and open-

ended credit agreements as referred to in the assumptions

set out in sub-paragraphs (i), (j), (k), (l) and (m)

(i) if the date or amount of a repayment of

capital to be made by the consumer cannot be

ascertained, it shall be assumed that the repayment

is made at the earliest date provided for in the

credit agreement and is for the lowest amount for

which the credit agreement provides;

(ii) if the interval between the date of initial

drawdown and the date of the first payment to be

made by the consumer cannot be ascertained, it

shall be assumed to be the shortest interval.

(h) Where the date or amount of a payment to be

made by the consumer cannot be ascertained on the basis

of the credit agreement or the assumptions set out in sub-

paragraphs (g), (i), (j), (k), (l) and (m) it shall be assumed

that the payment is made in accordance with the dates and

conditions required by the creditor and, when these are

unknown

(i) interest charges are paid together with

the repayments of the capital;

(ii) non-interest charges expressed as a

single sum are paid at the date of the conclusion of

the credit agreement;

(iii) non-interest charges expressed as

several payments are paid at regular intervals,

commencing with the date of the first repayment of

capital, and if the amount of such payments is not

known they shall be assumed to be equal amounts;

(iv) the final payment clears the balance of

capital, interest and other charges, if any.

(i) In the case of an overdraft facility, the total

amount of credit shall be deemed to be drawn down in full

and for the whole duration of the credit agreement. If the

duration of the overdraft facility is not known, the APRC

shall be calculated on the assumption that the duration of

the credit is three months.

(j) In the case of a bridging loan, the total

amount of credit shall be deemed to be drawn down in full

and for the whole duration of the credit agreement. If the

duration of the credit agreement is not known the APRC

shall be calculated on the assumption that the duration of

the credit is 12 months.

(k) In the case of an open ended credit

agreement, other than an overdraft facility and bridging

loan, it shall be assumed that

(i) for credit agreements, the purpose of

which is to acquire or retain rights in immovable

property the credit is provided for a period of 20

years starting from the date of the initial

drawdown, and that the final payment made by the

consumer clears the balance of capital, interest and

other charges, if any; in the case of credit

agreements the purpose of which is not to acquire

or retain rights in immovable property or which are

drawn down by deferred debit cards or credit cards,

this period shall be of one year;

(ii) the capital is repaid by the consumer in

equal monthly payments, commencing one month

after the date of the initial drawdown. However, in

cases where the capital must be repaid only in full,

in a single payment, within each payment period,

successive drawdowns and repayments of the entire

capital by the consumer shall be assumed to occur

over the period of one year. Interest and other

charges shall be applied in accordance with those

drawdowns and repayments of capital and as

provided for in the credit agreement.

For the purposes of this paragraph, an open-ended

credit agreement is a credit agreement without fixed

duration and includes credits which must be repaid in full

within or after a period but, once repaid, become available

to be drawn down again.

(l)

In the case of contingent liabilities or

guarantees, the total amount of credit shall be deemed to be

drawn down in full as a single amount at the earlier of

(i) the latest draw down date permitted

under the credit agreement being the potential

source of the contingent liability or guarantee; or

(ii) in the case of a rolling credit agreement

at the end of the initial period prior to the rollover

of the agreement.

(m) In

the

case

of

shared

equity

credit

agreements

(i) the payments by consumers shall be

deemed to occur at the latest date or dates

permitted under the credit agreement;

(ii) percentage increases in value of the

immovable property which secures the shared

equity credit agreement, and the rate of any

inflation index referred to in the agreement, shall

be assumed to be a percentage equal to the higher

of the current central bank target inflation rate or

the level of inflation in the Member State where the

immovable property is located at the time of

conclusion of the credit agreement or 0% if those

percentages are negative.".

Immediately after the Second Schedule to the principal Adds new

schedule to the

regulations there shall be added the following new schedule

principal

regulations.

"Third Schedule

[Regulations 6 and 18A]

Minimum Knowledge and Competence Requirements

1. The minimum knowledge and competence requirements

for creditors’ and credit intermediaries’ staff referred to in regulation

6 and for persons involved in the management of credit intermediaries

referred to in regulation 18A(7)(c) shall include

(a)

appropriate knowledge of credit products falling

within the scope of these regulations in accordance with

regulation 3 and the ancillary services typically offered with

(b)

appropriate knowledge of the laws related to the

credit agreements for consumers, in particular consumer

(c)

appropriate knowledge and understanding of the

immovable property purchasing process;

(d)

appropriate knowledge of security valuation;

(e)

appropriate knowledge

of

organisation

and

functioning of land registers;

(f)

appropriate knowledge of the market in Malta;

(g)

appropriate

knowledge

of

business

ethics

(h)

appropriate knowledge of the consumer’s

creditworthiness assessment process or, where applicable,

competence in assessing the consumer’s creditworthiness;

(i)

appropriate level of financial and economic

competency.

2. When establishing minimum knowledge and competence

requirements, the MFSA may differentiate between the levels and

types of requirements applicable to the staff of creditors, the staff of

credit intermediaries and the management of credit intermediaries.

3. The MFSA shall determine the appropriate level of

knowledge and competence on the basis of

(a)

professional qualifications, for example diplomas,

degrees, training, competency tests; or

(b)

professional experience, which may be defined as a

minimum number of years working in areas related to the

origination, distribution or intermediation of credit products

Provided that after 21 March 2019, the determination of the

appropriate level of knowledge and competence shall not be based

solely on the methods listed in sub-paragraph (b) of the paragraph 1.".

€9.27