Equity Release Financial Products Regulations, 2019

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 20,245, 6 ta’ Awwissu, 2019 B 1495

Taqsima B

L.N. 193 of 2019

BANKING ACT

(CAP. 371)

FINANCIAL INSTITUTIONS ACT

(CAP. 376)

Equity Release Financial Products Regulations, 2019

IN EXERCISE of the powers conferred by article 3 of the

Banking Act and article 12 of the Financial Institutions Act, the

Minister responsible for Finance and the Minister responsible for the

regulation of Financial Services, acting on the advice of the Malta

Financial Services Authority, has made the following regulations:-

(1) The title of these regulations is Equity Release Citation and

aim.

Financial Products Regulations, 2019.

(2) These regulations shall come into force as from 1

September 2019.

(3) The purpose of these regulations is to regulate equity

release financial products in order to provide a solution for the elderly

enabling them to enjoy their retirement in their own home whilst

releasing part of the equity built over the years in such home.

PART II

Interpretation

(Regulation 15(1) and (2))

INFORMATION DOCUMENT

PART A

(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.

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 equity release

financial product./We are not recommending a particular equity

release financial product for you. However, based on your

answers to some questions, we are giving you information about

this equity release financial product so that you can make your

own choice.)]

We recommend that you seek independent professional advice in

relation to this equity release financial product from a lawyer or

accountant duly authorized to practice in Malta.

2. Main features of the equity release financial product

Amount of the loan to be granted: [value]

Duration of the loan: [duration] [Type of loan]

[Type of applicable interest rate]

(Where applicable) The total amount to be reimbursed will be the

amount of the loan together with interest at the rate indicated

herein which will be compounded on an annual basis until

termination of the equity release financial product. Consequently,

the total amount to be reimbursed will change if the interest rate

changes.

(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 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]

3. 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

hypothec. [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 credit agreement.

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

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

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

associated with your loan.

(Where applicable) The cap on the borrowing rate is ______.

4. Frequency and number of payments (where applicable)

Repayment frequency: [frequency] Number of payments

[number]

5. Amount of each instalment (where applicable)

[Amount]

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

loan the [insert amount of loan on an interest-only basis] you will

owe at the end of the term will be payable from the sale of your

residential property.

(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) [Details on tied savings products, deferred-

interest loans]

6. (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.]), and, where applicable, other

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

the other costs column relate to [list of costs].

[Table]

7. 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]

8. 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.

Termination of any equity release financial product due to your

death or to your move to long-term care shall, in no case,

constitute an event of early termination and, consequently, shall

not to be subject to any early repayment charges.

9. Flexible features

(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 equity release

financial product not referred to in previous sections].

10. 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 equity release financial

product. (Where applicable) Once you have received the credit

agreement 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].

You shall have the right to move to a main residence different

from the main residence securing the equity release financial

product without incurring any financial penalty by the creditor

Provided that the new main residence to be granted as security

shall be of the same value or more: Provided further that you

shall bear any costs related to the constitution of security over the

new main residence and cancellation of the security over the old

main residence.

11. 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.

12. 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.

13. Additional information

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

contract].

Information and contractual terms will be supplied in [language].

With your consent, we intend to communicate in [language/s]

during the duration of the equity release financial product.

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

applicable, a draft credit agreement]

14. Supervisor

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

supervisory authority/ies]

PART B

Instructions to complete the Information Document

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

Information Document 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) The creditor shall inform the consumer whether advisory

services are being provided and on what basis using the wording

in Part A.

Section "2. Main features of the loan"

(1) This section shall clearly explain the main characteristics of

the credit, including the value and the potential risks associated

with the borrowing rate, including the ones referred to in sub-

paragraph (5), and the risks associated with changes in values of

immovable property.

(2) The creditor shall clearly state that (a) an equity release

financial product is a special type of loan which is usually

designed to run for the rest of the consumer’s life, and which

means that the consumer borrows money that is secured on his/

her home to give the consumer a lump sum/or a regular income;

(b) the amount the consumer owes to the creditor is usually paid

back from the proceeds of the sale of his/her home after death or

when the consumer moves into long-term care. If the consumer is

borrowing with someone else this would be after the death or

move into long-term care of the last borrower. Any money left

over would be paid to the consumer’s heirs: Provided that the

creditor cannot commence proceedings, judicial or otherwise, for

the sale or other transfer of the property securing the equity

release financial product for a period of at least thirty six (36)

months from the death of the consumer or his/her move to long-

term care: Provided further that, in the case of a move into long-

term care, the creditor and the consumer may agree to retain the

equity release financial product even after the lapse of such thirty

six month period, for so long as such agreement subsists, until

the death of the consumer: Provided further that in any case, the

consumer or the heir/s of the deceased consumer, as applicable,

shall be free to repay the equity release financial product in full

against the release of the property securing the equity release

financial product; and (c) if the consumer decides that he/she

simply does not want the equity release financial product any

more, the consumer can repay the amount he/she owes to the

creditor at any time, but, in such case, the creditor may make an

early repayment charge. Section 9 of this Information Document

indicates if any early repayment charges apply to this equity

release financial product.

(3) The type of credit shall be clearly indicated. The

description of the type of credit shall clearly indicate how the

capital and the interest shall be reimbursed (i.e. the amortisation

structure), specifying clearly whether the credit agreement is on

interest-only basis.

(4) 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.

(5) 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: Provided that the borrowing rate shall be fixed or

capped for the whole duration of the equity release financial

product.

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.

(6) If different borrowing rates apply in different

circumstances, the information shall be provided on all

applicable rates.

(7) 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.

(8) The creditor shall draw the consumer’s attention to the fact

that the credit is secured by a hypothec on the immovable

property. Where applicable the creditor shall indicate the

assumed value of the immovable property used for the purpose of

preparing this information document.

(9)

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’.

(10) 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.

(11) The creditor shall also draw the consumer’s attention to the

fact that the term of the equity release financial product is

estimated at [insert number of years] years, but that the term of

the equity release financial product is not fixed and could be

longer or shorter than [insert number of years] years. If the

consumer is still living in his/her home at the end of [insert

number of years] years, the equity release financial product will

continue to run.

Section "3. 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 Information

Document: Provided that the borrowing rate shall be fixed or

capped for the whole duration of the equity release financial

product.

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. The

warning shall be accompanied by an illustrative example on the

APRC. Since 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.

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 29(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) Information on the compounding of interest shall be

provided.

(4) 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 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 the Second Schedule, 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.

(5) Where a fee is payable for registration of the hypothec 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 "4. 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 "5. Amount of each instalment"

(1) 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.

(2) 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 hypothec, the amount and frequency of any

payments for this product shall be provided.

(3) 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. Since

there is a cap, the illustration shall show the amount of the

instalments if the borrowing rate rises to the level of the cap. 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: Provided that the

borrowing rate/s shall be fixed or capped for the whole duration

of the equity release financial product.

(4) 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 the remaining debt.

Section "6. 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.

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) 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: Provided that the

borrowing rate shall be fixed or capped for the whole duration of

the equity release financial product.

(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" and "other costs

included in the instalment" (where relevant).

(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 "7. Additional obligations"

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

the obligation to insure the immovable property, to have a salary

or pension 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 equity

release financial product 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 equity release financial product 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 equity release financial product 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

equity release financial product.

Section "8. 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 "9. Flexible features"

(1) The creditor shall explain the possibility to and conditions

for transferring the credit to another 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 hypothec 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 hypothec); whether the

additional credit is secured or not; the relevant borrowing rates;

and whether it is regulated or not.

(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]; ‘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 equity release financial product not

mentioned in previous sections.

Section "10. 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 "11. 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 equity release financial products with a

consumer who is resident in another Member State, the creditor

shall refer to the existence of FIN-NET (http:// ec.europa.eu/

internalmarket/fin-net/).

Section "12. 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 7 ‘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.

Section "13. Additional information"

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

any clause stipulating the law applicable to the equity release

financial product or the competent court.

(2) The creditor 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 "14. Supervisor"

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

the pre-contractual stage of lending shall be indicated.

In these regulations, unless the context otherwise requires

"advertisement" means any form or medium of marketing

activity or communication, other than a prospectus, which

promotes the purchase of the Equity Release Financial Product,

and which is addressed by a creditor to a consumer. An

advertisement shall not include the provision of a personal

recommendation but shall include any advertisement which is

disseminated to the public via all types of media. The form or

medium of an advertisement may include any of the following

(a)

addressed or unaddressed printed matter;

(b) electronic message or advertisement received

via a mobile telephone or pager;

(c)

standard letters;

(d)

press advertising with or without order form;

(e)

catalogue;

(f)

telephone with or without human intervention;

(g)

seminars and presentations;

(h)

radio;

(i)

videophone;

(j)

videotext;

(k)

e-mail;

(l)

fax;

(m) television;

(n)

notice;

(o)

billboards;

(p)

posters;

(q)

brochure;

(r)

web posting including internet banners,

and the term "advertising" shall be construed accordingly;

"advisory services" means the provision of personal

recommendations to a consumer in respect of one or more

transactions relating to equity release financial products and

constitutes a separate activity from the equity release financial

product;

"ancillary service" means a service offered to the consumer

in conjunction with the equity release financial product;

"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 29(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;

"borrowing rate" means the interest rate expressed as a

fixed or variable percentage applied on an annual basis to the

amount of credit drawn down;

"bundling practice" means the offering or the selling of an

equity release financial product in a package with other distinct

financial products or services where the equity release financial

product 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;

"business day" means a day other than Saturdays and

Sundays and public holidays on which creditors are open for

business;

"competent authority" means the Malta Financial Services

Authority established under the Malta Financial Services Cap. 330.

Authority Act;

"consumer" means any individual who has attained pension

age, as defined in the Social Security Act, and who is acting for Cap. 318.

purposes which are not related to and outside his trade, business,

craft or profession;

"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;

"credit" means the equity release financial product

consisting of a credit falling within the scope of these regulations

in accordance with regulation 3;

"credit agreement" means an agreement whereby a creditor,

grants or promises to grant, to a consumer, credit in the form of

an equity release financial product, and shall be distinct from the

public deed of loan;

"creditor" means a legal person who, duly authorised,

grants or promises to grant credit in the form of an equity release

financial product in the course of his trade, business or

profession;

"Data Protection legislation" means the Data Protection Act

and Regulation (EU) 2016/679 of the European Parliament and

of the Council of 27 April 2016 on the protection of natural

persons with regard to the processing of personal data and on the

free movement of such data, and repealing Directive 95/46/EC,

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;

"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;

"durable medium" means any instrument which enables the

consumer to store information addressed personally to him in a

way accessible for future reference for a period of time adequate

for the purposes of the information and which allows the

unchanged reproduction of the information stored;

"equity release financial product" means the same as the

definition assigned to it under regulation 3;

"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;

"financial institution" means a financial institution as

defined in regulation 2(1) of the Financial Institutions Act;

"Financial Services Tribunal" means the Financial Services

Tribunal established under the Malta Financial Services Cap. 330.

Authority Act;

"fixed borrowing rate" means that the creditor and the

consumer agree in the credit agreement on one borrowing rate

for the entire duration of the credit agreement or on several

borrowing rates for partial periods using exclusively a fixed

specific percentage. If not all borrowing rates are determined in

the credit agreement, the borrowing rate shall be deemed to be

fixed only for the partial periods for which the borrowing rates

are determined exclusively by a fixed specific percentage agreed

on the conclusion of the credit agreement;

"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;

"home Member State" means the Member State in which

the creditor’s 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;

"host Member State" means the Member State, other than

the home Member State, in which the creditor has a branch or

provides services;

"Information Document" means the Information Document

set out in the First Schedule;

"Member State" means a State which is a contracting party

to the agreement on the European Economic Area signed at

Oporto on the 2nd May, 1992 as amended by the Protocol signed

at Brussels on the 17th March, 1993 and as amended by any

subsequent acts;

"Notary Public" means the same as the definition assigned

to it under article 2(1) of the Notarial Profession and Notarial

Archives Act;

"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;

"staff" means

(a) any natural person working for the creditor 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);

"total amount of credit" means the ceiling or the total sums

made available under a credit agreement;

"total amount payable to the consumer" means the total

amount of the credit less the total cost of such credit to the

consumer;

"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 such credit on the terms and conditions marketed;

"tying practice" means the offering or the selling of an

equity release financial product in a package with other distinct

financial products or services where the equity release financial

product is not made available to the consumer separately;

"variable borrowing rate" means that the creditor and the

consumer agree in the credit agreement on a borrowing rate

based on an underlying index or reference rate that changes

periodically.

PART III

Scope and Application

(Regulation 29)

Calculation of the annual percentage rate of charge.

I. Basic equation expressing the equivalence of drawdowns on the one

hand and repayments and charges on the other.

The basic equation, which establishes the annual percentage rate

of charge (APRC), equates, on an annual basis, the total present

value of drawdowns on the one hand and the total present value

of repayments and payments of charges on the other hand,

i.e.

where

X

is the APRC,

m

is the number of the last drawdown,

k

is the number of a drawdown, thus 1 ≤ k ≤ m,

Ck

is the amount of drawdown k,

tk

is the interval, expressed in years and fractions of a year,

between the date of the first drawdown and the date of each

subsequent drawdown, thus t1 = 0,

m’

is the number of the last repayment or payment of charges,

l

is the number of a repayment or payment of charges,

Dl

is the amount of a repayment or payment of charges,

Sl

is the interval, expressed in years and fractions of a year,

between the date of the first drawdown and the date of each

repayment or payment of charges.

Remarks

(a) The amounts paid by both parties at different times

shall not necessarily be equal and shall not necessarily be paid at

equal intervals.

(b)

The starting date shall be that of the first drawdown.

(c) Intervals between dates used in the calculations shall

be expressed in years or in fractions of a year. A year is

presumed to have 365 days (or 366 days for leap years), 52

weeks or 12 equal months. An equal month is presumed to have

30.41666 days (i.e. 365/12) regardless of whether or not it is a

leap year.

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.

(d) The result of the calculation shall be expressed with

an accuracy of at least one decimal place. If the figure at the

following decimal place is greater than or equal to 5, the figure at

that particular decimal place shall be increased by one.

(e) The equation can be rewritten using a single sum and

the concept of flows (Ak), which will be positive or negative, in

other words either paid or received during periods 1 to n,

expressed in years, i.e.

S

being the present balance of flows. If the aim is to maintain

the equivalence of flows, the value will be zero.

II. Additional assumptions for the calculation of the annual percentage

rate of charge

(a) If a credit agreement gives the consumer freedom of

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

drawn down immediately and in full.

(b) If a credit agreement provides different ways of

drawdown with different charges or borrowing rates, the total

amount of credit shall be deemed to be drawn down at the

highest charge and borrowing rate applied to the most common

drawdown mechanism for this type of credit agreement.

(c) If a credit agreement gives the consumer freedom of

drawdown in general but imposes, among the different ways of

drawdown, a limitation with regard to the amount and period of

time, the amount of credit shall be deemed to be drawn down on

the earliest date provided for in the agreement and in accordance

with those drawdown limits.

(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) In estimating the term of the equity release financial

product, the lender shall use an estimate of the life expectancy of

the consumer that is reasonable and based on evidence. Where

the consumer is borrowing with someone else, the term

estimated should be based on the longest life expectancy. Where

the term using this approach is less than fifteen years, the lender

shall use a term of fifteen years.

(g) 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.

These regulations shall apply to equity release financial Scope and

products consisting of equity release credit agreements where the application.

creditor

(a) grants on loan 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

(b) will not seek repayment of the credit until the

occurrence of the death of the consumer or his/her move to long-

term care or any one or more other specified life events of the

consumer as may be defined by the competent authority, unless

the consumer breaches his contractual obligations which allows

the creditor to terminate the credit agreement

Provided that the creditor cannot commence

proceedings, judicial or otherwise, for the sale or other transfer

of the property securing the equity release financial product for a

period of at least thirty six (36) months from the death of the

consumer or his/her move to long-term care

Provided further that, in the case of a move into long-

term care, the creditor and the consumer may agree to retain the

equity release financial product even after the lapse of such thirty

six (36) month period, for so long as such agreement subsists,

until the death of the consumer,

and any such other product as may be defined as an equity release

financial product by the competent authority from time to time.

(Regulation 14)

1. The minimum knowledge and competence requirements for

creditors’ staff referred to in regulation 14 shall include

(a) appropriate knowledge of equity release financial

products falling within the scope of these regulations in

accordance with regulation 3 and the ancillary services typically

offered with them;

(b) appropriate knowledge of the laws related to the

equity release financial product for consumers, in particular

consumer protection;

(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 immovable property

market in Malta;

(g)

appropriate knowledge of business ethics standards;

(h) appropriate

level

of

financial

and

economic

competency.

2. The competent authority 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 or distribution of credit products.

€2.52

The parties to an equity release financial product shall

expressly agree that the transfer to the creditor of the security or

proceeds from the sale of the security is sufficient to repay the credit.

There shall be an undertaking by the creditor against negative equity

so that on termination of the equity release financial product the

consumers or their heirs will never be obliged to pay more to the

creditor than the value of the residence (the security for the equity

release financial product). The creditor shall not have the right to

request any security for the equity release financial product other than

a charge over the residence of the borrower or a right relating thereto

and a charge over an adequate property insurance over such residence

or right relating thereto.

PART IV

Competent Authority

(1) The competent authority for the purposes of these

regulations shall be the Malta Financial Services Authority.

(2) Without prejudice to the provisions of the Criminal Code,

officers of the competent authority, including past and present officers,

as well as auditors or experts acting on behalf of the competent

authority, shall be governed by the obligation of professional secrecy

and shall not disclose any information received in the course of

carrying out their supervisory and other duties to any person or

authority, unless such disclosure of information is done in summary or

collective form

Provided that the said officers, auditors or experts may

divulge such information for the purpose of the performance of their

duties or the exercise of their functions, or when lawfully required to

do so by any court or under a provision of any law

Provided further that this sub-regulation shall not prevent

the competent authority from exchanging or transmitting confidential

information in accordance with national and European Union law.

(1) It shall be the duty of the competent authority to carry Powers and

out the functions and duties prescribed by these regulations and to duties

competent

ensure that creditors carrying out their activities in Malta comply with authority.

these regulations and any directives made or issued thereunder.

(2) Without prejudice to any of the powers conferred by these

regulations, the competent authority 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

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.

(3) The competent authority may issue rules for the better

carrying out and to better implement the provisions of these

regulations.

(4) The competent authority shall monitor the activities of

creditors so as to assess compliance with the requirements of these

regulations and any directives made or issued thereunder.

(5) Any person to whom a notice is given in accordance with

sub-regulation (2) shall obey, comply with and otherwise give effect to

any such directive within the time and in the manner stated in the

directive.

(6) Where the competent authority 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.

It shall be the responsibility of the competent authority to

Enforcement

and monitoring.

(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 in terms of these regulations and

ensure that there is compliance by them with the obligations

established under these regulations.

(1) Any officer, employee or agent of the competent

authority may, for the purposes of regulation 7, 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 competent

authority may appoint one or more competent persons, as inspectors,

to investigate and report on the nature, conduct or state of the

creditor’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 creditor concerned,

including

(a) a holding company, subsidiary or a company which is

a connected person of the creditor under investigation; or

(b) a subsidiary or a company which is a connected

person of a holding company of that creditor; or

(c)

a holding company of a subsidiary of that creditor; or

(d)

a controller of that creditor; or

(e)

an outsourcing service provider of that creditor.

(3) Where the competent authority 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 creditor, 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 competent authority shall have the power to order that

all expenses of, and incidental to, an investigation pursuant to this

regulation be paid by the creditor concerned.

(1) Any officer, employee, agent or inspector of the Right of entry

competent authority may, on producing, if required, evidence of his to

information and

authority

documents.

(a) enter any premises occupied by a person on whom a

notice has been served in terms of regulation 8 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 8 for the purpose

of obtaining there such information or documents as may be

specified by the competent authority, being information or

documents that could have been required by such a notice

Provided that the competent authority 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.

PART V

Financial Education of Consumers

(1) The competent authority shall promote measures that

support the education of consumers in relation to equity release

financial products.

(2) The competent authority shall provide clear and general

information to consumers on equity release financial products, in order

to guide consumers, especially those entering into an equity release

financial product for the first time. The competent authority shall also

disseminate information to consumers regarding the guidance which

may be published from time to time by creditors in accordance with

sub-regulation (5), as well as regarding any guidance on equity release

financial products, which may be provided to consumers by consumer

organisations from time to time.

(3) In order to carry out the obligation prescribed in sub-

regulation (2), the competent authority may request the assistance of

creditors, in writing, who shall assist and provide the competent

authority in a timely manner, with any information which the

competent authority may require.

(4) The competent authority may also request creditors, in

writing, to provide clear and general information to consumers on

equity release financial products, in order to guide consumers,

especially those entering into an equity release financial product for

the first time.

(5) Any information provided to consumers by the competent

authority in accordance with sub-regulation (2) and any information

which creditors are required to provide to consumers in accordance

with sub-regulation (4) shall be made publicly available.

PART VI

Obligations of the Creditor

A creditor shall take all necessary steps to ensure full Obligation to

comply with

compliance with these regulations.

regulations.

When information is provided to consumers in compliance Obligation to

with the requirements set out in these regulations, such information provide

information free

shall be provided free of charge to the consumer.

of charge to

consumers.

(1) When manufacturing and distributing equity release Conduct of

financial products falling within the scope of these regulations in business

obligations

accordance with regulation 3, or granting or providing advisory when

providing

credit to

services on equity release financial products and, where appropriate, consumers.

ancillary services to consumers or when executing an equity release

financial product, the creditor shall act in accordance with the

following principles

The creditor must conduct its business

Good faith, honesty

(a)

in good faith, with honesty and integ-

and integrity

rity.

The creditor must conduct its business

Professionalism, skill,

(b)

with professionalism, due skill, care

care and diligence

and diligence.

The creditor must take reasonable care

Management and con-

to organise and control its affairs

(c)

trol

responsibly and effectively, with ade-

quate risk management systems.

The creditor must observe proper

(d) Market conduct

standards of market conduct.

The creditor must pay due regard to the

Consumers' rights and

(e)

rights and interests of its consumers

interests

and treat them fairly.

The creditor must pay due regard to the

information needs of its consumers,

Communications with

(f)

and communicate information to them

consumers

in a way which is clear, fair and not

misleading.

The creditor must manage conflicts

of interest fairly and reduce same to

the lowest practical level, and, when

(g) Conflicts of interest

they cannot be avoided, the creditor

must disclose them to the consumer

and disclose the steps taken to miti-

gate them.

The creditor must take reasonable care

to ensure that the advice is suitable for

Consumers: relation-

the consumer who is entitled to rely

(h)

ships of trust

upon its judgment. Any suitability

assessment carried out must be prop-

erly documented.

The creditor must arrange adequate

(i) Consumers' assets

protection for consumers' assets when

it is responsible for them.

The creditor must deal with the compe-

tent authority in an open and coopera-

tive way, and must disclose to the

Relations with the

(j)

competent authority appropriately any-

competent authority

thing relating to the creditor of which

the competent authority would reasona-

bly expect notice.

Provided that in relation to the granting 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 18(3)(a).

(2) Creditors shall ensure that the manner in which their staff

are remunerated does not impede compliance with the obligation to act

in accordance with the obligation set out in sub-regulation (1).

(3) Creditors providing advisory services shall also 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./pp.

(4) In addition and without prejudice to the foregoing,

creditors shall ensure that

(a) All their actions promote public confidence in equity

release as a potential retirement solution.

(b) Consumers shall have the right to live in their homes

(the security for the equity release financial product) as their

main residence throughout the term of the equity release

financial product until the survivor (in case of joint borrowers)

dies or moves into long-term care

Provided that the creditor cannot commence

proceedings, judicial or otherwise, for the sale or other transfer

of the property securing the equity release financial product for a

period of at least thirty six (36) months from the death of the

consumer or his/her move to long-term

Provided further that, in the case of a move into long-

term care, the creditor and the consumer may agree to retain the

equity release financial product even after the lapse of such thirty

six month period, for so long as such agreement subsists, until

the death of the consumer.

For the purposes of these regulations "moves into long term

care" shall be evidenced by a written declaration of the

management of the home for the aged where the consumer

resides or is going to reside, stating that in the present

circumstances, it is reasonable to believe that the consumer will

be staying at the home for the aged and will not be returning to

his/her main residence.

(c) Following the termination of the equity release

financial product, for whatever reason, there shall be a period of

at least thirty-six (36) months before which the creditor cannot

commence proceedings, judicial or otherwise, for the sale or

other transfer of the property securing the equity release

financial product.

In the case of termination of the equity release financial

product because the consumer has moved into long term care, the

said period of thirty six (36) months shall start to run from the

day the consumer moves into long term care.

In the case of termination of the equity release financial

product because the consumer has died, if the consumer had not

moved into long term care, the said period of thirty six (36)

months shall start to run from the death of the consumer.

In the case of termination of the equity release financial

product because the consumer has died, if the consumer had

moved into long term care, the said period of thirty six (36)

months shall start to run from the day the consumer moved into

long term care.

In any case, the consumer or the heir/s of the deceased

consumer, as applicable, shall be free to repay the equity release

financial product in full against the release of the property

securing the equity release financial product.

(d) Equity release financial products shall be provided

only to consumers who have attained pension age, as defined in

the Social Security Act and, in case of joint borrowers, both

borrowers shall have attained pension age, as defined in the

Social Security Act.

(e) The liability of the consumer under the equity release

financial product at the termination of the equity release

financial product, as estimated by the creditor at the

commencement of the equity release financial product, shall not

exceed sixty per cent (60%) of the value of the property securing

the equity release financial product at the commencement of the

equity release financial product, which valuation shall be

procured by the creditor.

(f) The borrowing rate/s of the equity release financial

product shall be fixed or capped for the whole duration of the

equity release financial product.

(g) Consumers shall have the right to move to a main

residence different from the main residence securing the equity

release financial product without incurring any financial penalty

by the creditor

Provided that the new main residence to be granted as

security shall be of the same value or more

Provided further that the consumers shall bear any

costs related to the constitution of security over the new main

residence and cancellation of the security over the old main

residence.

(h) Consumers shall be given a strong recommendation

to seek independent professional advice in relation to the equity

release financial product from a lawyer or accountant of the

consumers’ choice, which lawyer or accountant is duly

authorised to practice in Malta.

(i) Consumers have considered all alternative courses of

action (such as selling current residence and moving to a smaller

residence, or renting out part of current residence) that could

deliver the consumer's objective without recourse to equity

release financial products.

(j)

Creditors shall assess the physical and mental health

of the consumer in relation to the equity release financial product

and in case of reasonable doubt, shall refer the consumer to the

appropriate health specialist for proper certification.

(1) Creditors shall require their staff to possess and to Knowledge and

keep up-to-date an appropriate level of knowledge and competence in competence

requirements

relation to the manufacturing, the offering or granting of equity release for staff.

financial products, or the provision of advisory services.

(2) Where the conclusion of an equity release financial product

includes an ancillary service, creditors 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 host Member State, and a European

creditor provides its services within the territory of Malta

(a) through the establishment of a branch, the competent

authority shall be satisfied with the level of knowledge and

competence of the staff of such a branch offering equity release

financial products in accordance with the requirements set out in

the Third Schedule;

(b) under the freedom to provide services, the competent

authority may establish the minimum knowledge and

competence requirements for those requirements referred to in

paragraphs (b), (c), (e) and (f) of item 1 of the Third Schedule.

(4) The competent authority shall supervise European creditors

authorised to provide their services in Malta in order to ensure

compliance with the requirements of sub-regulations (1) to (3)

Provided that for the purposes of this sub-regulation, the

competent authority shall have the power to require such European

creditors to provide such evidence as the competent authority may

deem necessary.

(5) Any criteria established by the competent authority in order

for creditors’ staff to meet their professional requirements shall be

made public.

PART VII

Information and practices preliminary to the

conclusion of the credit agreement

(1) The creditor shall provide the consumer with the Obligation to

personalised information needed to compare the equity release provide

contractual

financial products available on the market, assess their implications information.

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;

(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 Information Document, as set

out in the First Schedule.

(3) Creditors shall provide the Information Document 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 Information Document

previously provided in accordance with this sub-regulation, it shall be

accompanied by an updated Information Document.

(4) The consumer shall be entitled to a full fourteen (14) 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 who has supplied the Information Document

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 S.L. 330.07.

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 Information Document prior to the conclusion of

the contract.

(6) The Information Document model set out in the First

Schedule shall not be modified

Provided that where the creditor wishes to provide to the

consumer any additional information, and, or where the creditor 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 Information Document.

(7) In case of voice telephony communications, as referred to

in regulation 5(3) of the Distance Selling (Retail Financial Services) S.L. 330.07.

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 S.L. 330.07.

(Retail Financial Services) Regulations, shall include at least the items

referred to in sections 2 to 5 of Part A of the First Schedule.

(8) The creditor 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.

(1) Creditors shall provide adequate explanations to the Adequate

consumer on the proposed equity release financial product and any explanations.

ancillary services, in order to place the consumer in a position enabling

him to assess whether the proposed equity release financial product

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;

(b)

the essential characteristics of the product proposed;

(c) the specific effects the products proposed may have

on the consumer, including, if applicable, the consequences of

(i)

default in payment by the consumer;

(ii) delayed termination of the equity release

financial product due to extended longevity of the

consumer; and

(iii) fall in the market value of the residence (the

security for the equity release financial product) on

termination of the equity release financial product; and

(d) where ancillary services are bundled with an equity

release financial product, whether each component of the bundle

can be terminated separately and the implications for the

consumer of doing so.

(3) The competent authority may adapt the manner by which

and the extent to which the explanations referred to in sub-regulations

(1) and (2) are given, as well as by whom they are given, to the

circumstances of the situation in which the equity release financial

product is offered, the person to whom it is offered and the nature of

the credit offered.

(1) Creditors shall make available clear and

comprehensible general information about equity release financial

products at all times on paper or on another durable medium or in

electronic form, and as much as possible, in plain English language or,

upon the request of the consumer, in the Maltese language, or in any

other language agreed upon between the creditor and 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) the purposes for which the credit may be used;

(c) the forms of security, including, where applicable, the

possibility for it to be located in another different Member State;

(d) 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;

(e) a list of related cost elements, such as administrative

costs, insurance costs and legal costs;

(f) an indication of the cost of a typical credit agreement

for the consumer;

(g)

the possible duration of the credit agreement;

(h) 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

Provided further that the borrowing rate/s shall be

fixed or capped for the whole duration of the equity release

financial product;

(i) 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;

(j) an indication of possible further costs, not included in

the total cost of the credit to the consumer, to be paid in

connection with an equity release financial product;

(k) the range of different options available for

reimbursing the credit to the creditor, including, where

applicable, the number, frequency and amount of the regular

repayment instalments;

(l) a description of the conditions directly relating to

early repayment;

(m) 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;

(n) where applicable, details on how to obtain

information on tax relief on the equity release financial product

interest or other public subsidies;

(o) an indication of ancillary services the consumer is

obliged to acquire in order to obtain the equity release financial

product 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

(p) a general warning concerning possible consequences

of non-compliance with the commitments linked to the equity

release financial product.

(3) The competent authority may oblige creditors to include

other types of warnings which are relevant in Malta.

PART VIII

Advisory Services

(1) The creditor 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 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 exact 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 13 and 14

(a) creditors shall obtain the necessary information

regarding the consumer’s personal and financial situation, and

objectives so as to enable the recommendation of suitable equity

release financial products. 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 equity release

financial product;

(b) creditors shall consider a sufficiently large number of

equity release financial products in their product range and

recommend a suitable equity release financial product from

among their product range for the consumer’s needs, financial

situation and personal circumstances;

(c) creditors shall act in the best interests of the

consumer by

(i) informing themselves about the consumer’s

needs and circumstances; and

(ii) recommending suitable equity release financial

products in accordance with paragraphs (a) and (b); and

(d) creditors shall give the consumer a record on paper or

on another durable medium of the recommendation provided.

(4) The use of the term "independent advice" and "independent

advisor" or similar terms shall be prohibited when the advisory

services are being provided to consumers by creditors.

(5) Creditors shall issue a written warning to a consumer when,

considering the consumer’s financial situation, an equity release

financial product may include a specific risk for the consumer.

(6) This regulation is without prejudice to regulation 16 and to

the competent authority’s 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.

PART IX

Data Protection

Without prejudice to the provisions of the Data Protection Collection and

legislation, personal data obtained from a consumer or any other processing

personal data.

person in connection with the conclusion and management of any

equity release financial product may only be processed for the purpose

of concluding and managing such equity release financial product in

accordance with these regulations.

PART X

Property Valuation

(1) Creditors shall ensure that the standards applicable in Property

Malta are used where they carry out a property valuation, or shall take valuation.

reasonable steps to ensure that those standards are applied where a

valuation is conducted by a third party.

(2) Creditors shall also ensure that internal and external

appraisers conducting property valuations are professionally

competent and sufficiently independent from the credit underwriting

process relating to equity release financial products 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.

PART XI

Rights of the Consumer

(1) Without prejudice to regulations 15 to 17, 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

(10) days from such registration.

(1) The credit agreement shall be drawn up in writing or

on a durable medium, and shall specify as much as possible, in a plain

and intelligible language that can be easily understood by the

consumer, the following

(a) the information listed under regulation 17(2)(b), (c),

(e), and (g) to (j);

(b) the identities and geographical addresses of the

contracting parties;

(c) the annual percentage rate of charge and the total

amount payable by the consumer calculated at the time the credit

agreement is concluded

Provided that all the assumptions used in calculating that

rate shall be mentioned;

(d) the right of the consumer to receive, on request and

free of charge, at any time throughout the duration of the credit, a

statement of account in the form of an amortisation table

Provided that the amortisation table shall

(i) indicate the payments owing and the periods

and conditions relating to the payment of such amounts;

(ii) contain a breakdown of each repayment

showing the interest calculated on the basis of the

borrowing rate and where applicable any additional costs;

(iii) where the interest is not fixed or the additional

costs may be changed under the credit agreement, it shall

indicate clearly and concisely that the data contained in the

table will remain valid only until such time as the

borrowing rate or the additional costs are changed in

accordance with the credit agreement;

(e) if charges and interest are to be paid, a statement

showing the periods and conditions for the payment of the

interest and of any associated recurrent and non-recurrent

charges;

(f) the interest rate applicable in the case of late

payments as applicable at the time of the conclusion of the credit

agreement and the arrangement for its adjustment and, where

applicable, any charges payable for default;

(g) the procedure to be followed in exercising the right of

termination of the credit agreement;

(h) information concerning the right resulting under

regulation 23 and the conditions attached to that right;

(i) whether or not there is an out-of-court procedure for

the consumer to make a complaint, the redress mechanism

available and the methods for having access to it;

(j) where applicable, other contractual terms and

conditions.

(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.

(3) Where applicable, the creditor shall make available to the

consumer, free of charge and at any time during the duration of the

equity release financial product, a statement of account in the form of

an amortisation table.

(4) Every public deed of loan to which these regulations apply

shall make a direct reference to the equity release financial product

entered into and between the creditor and the consumer, the date

thereof and shall state expressly that the consumer has received, read,

understood and agreed to all the terms set out in the credit agreement,

after due explanation by the creditor as may be amended from time to

time according to the terms thereof.

(1) A consumer shall have the right to discharge his

obligations under an equity release financial product, 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 regulation 22(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

competent authority 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.

(7) Termination of any equity release financial product due to

the death of the consumer or to his/her move to long-term care shall, in

no case, constitute an event of early termination and, consequently,

shall not be subject to any early repayment charges.

(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 articles 1196 to 1204 of the Civil Code,

which shall apply irrespective of anything to the contrary contained in

a credit agreement.

(2) The consumer shall be informed of the assignment referred

to in sub-regulation (1) except where the original creditor, by

agreement with the assignee, continues to service the credit vis-à- vis

the consumer.

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 competent

authority; 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

Provided that the borrowing rate/s shall be capped for

the whole duration of the equity release financial product.

PART XII

Obligations of the Consumer

(1) Consumers shall provide creditors with complete and

correct information on their financial situation and personal

circumstances in the context of the application process for an equity

release financial product.

(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 to make a decision on whether or

not to grant the credit under the equity release financial product, the

creditor shall at the pre-contractual phase, clearly specify the

information, including independently verifiable evidence where

necessary, that the consumer needs to provide.

(4) Creditors shall state the timing by which consumers are

required to provide such information.

(5) This regulation is without prejudice to the application of

the Data Protection legislation.

PART XIII

Miscellaneous

(1) Without prejudice to Directive 2005/29/EC, any Advertising.

advertising and marketing communications concerning equity release

financial products 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 an equity release financial product shall

be prohibited.

(2) Without prejudice to the provisions relating to unfair

commercial practices under the Consumer Affairs Act, any advertising Cap. 378.

concerning equity release financial products 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;

(b) that the product advertised is an equity release

financial product and that the credit agreement will be secured

by a hypothec on residential immovable property or on a right

related to residential immovable property;

(c) the borrowing rate, indicating whether this is fixed or

variable or a combination of both

Provided that the borrowing rate/s shall be fixed or

capped for the whole duration of the equity release financial

product;

(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 interest;

(j) a warning concerning the risk of losing the

immovable property in the event of non-observance of the

commitments linked to the credit agreement and, in any case, on

termination of the credit agreement; and

(k) a warning that compounding of interest could

materially reduce the value of the estate of the consumer.

(4) The information listed in sub-regulation (3) other than that

listed in paragraphs (a) and (b) of sub-regulation (3), shall be specified

by means of a representative example and shall adhere to that

representative example throughout.

(5) (a) Any advertising concerning equity release financial

products which includes 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 equity release financial product,

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 competent authority may require the inclusion of a

concise and proportionate warning concerning specific risks associated

with credit agreements.

(8) This regulation shall be without prejudice to Directive

2005/29/EC.

(1) Whilst bundling practices shall be allowed, tying Tying and

bundling

practices shall be prohibited.

practices.

(2) 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.

(1) The annual percentage rate of charge shall be Annual

calculated in accordance with the mathematical formula set out in the percentage

of charge.

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 estimated period 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 (5) 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 Information Document 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 Information

Document, 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 this sub-regulation shall not apply to credit

agreements where the borrowing rate is fixed for an initial period of at

least five (5) 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 Information Document.

(7) Where applicable, the additional assumptions set out in the

Second Schedule shall be used in calculating the annual percentage

rate of charge.

(1) Where the competent authority has reasonable

grounds for suspecting that a person has contravened or has failed to

comply with any provision of these regulations and any 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 competent authority 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 competent

authority may, 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 sub-regulation (1) 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.

No person who knows or suspects that an investigation is Obstruction.

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.

Every officer of a creditor shall take all reasonable steps

Duties of

officers.

(a) to secure compliance by the creditor with all of the

provisions of these regulations and any rules issued thereunder;

and

(b) to ensure that no incorrect information is provided to

the competent authority either wilfully or as the result of gross

negligence.

(1) Without prejudice to the provisions of regulation 34, Administrative

the competent authority may impose an administrative fine, issue such fines.

order or directive, or decision or take such measure as may be deemed

appropriate in terms of these regulations, upon any person who

contravenes or fails to comply with any of the provisions of these

regulations.

(2) Any person guilty of an offence under the provisions of

these regulations shall be liable on conviction to a fine (multa) not

exceeding four hundred and sixty-five thousand eight hundred and

seventy-five euro (€465,875) or to a term of imprisonment not

exceeding four (4) years, or to both such fine and imprisonment.

(1) Without prejudice to the provisions of regulation 33,

where the competent authority is satisfied that a person’s conduct

amounts to a breach of any of the provisions of these regulations, or

such person has failed to comply with a directive issued by the

competent authority under these regulations, the competent authority

may, by notice in writing and without recourse to a court hearing,

impose on such person an administrative penalty which may not

exceed one hundred and fifty thousand euro (€150,000) for each

infringement or failure to comply as the case may be.

(2) Where the competent authority 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 competent authority the amount of

the administrative fine within a period of thirty (30) days of the

service of the notice, and fails to appeal from the decision of the

competent authority to the Financial Services Tribunal; or

(b) appeals to the Financial Services Tribunal and fails

within a period of fifteen (15) 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 competent authority 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.

Any person who feels aggrieved by a decision and, or

measure taken by the competent authority pursuant to these

regulations, 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.

(1) The competent authority may publish, on its official Publication of

website and, or in any other media as it considers appropriate, any administrative

fines.

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 competent authority 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 competent authority for a period

of not less than five (5) years. Personal data shall be retained on the

official website of the competent authority and in any other media it

considers appropriate only for the period necessary, in accordance with

the provisions of the Data Protection legislation.

(1) The provisions of these regulations cannot be Regulations to

circumvented in a way which could lead to consumers losing the prevail.

protection granted by these regulations as a result of the way in which

equity release financial products 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.

(2) Any waiver by the consumer of any of the rights granted to

him by these regulations shall be null and void.

(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 country other than Malta, the protection granted by these

regulations shall continue to apply where the credit agreement has a

close link with Malta.

(1) Creditors shall put in place and apply adequate and Complaints.

effective complaint resolution procedures for the settlement of

complaints of consumers concerning the rights and obligations arising

from the provisions of these regulations.

Creditors shall make such complaint resolution procedures

available in English or, upon the request of the consumer, in Maltese or

in any other language agreed upon between the creditor and the

consumer.

(2)

Creditors shall make every possible effort to reply, on paper

or on another durable medium, to the consumers’ complaints. Such a

reply shall address all points raised, within an adequate time-frame and

at the latest within fifteen (15) business days of receipt of the

complaint.

(3) The creditor shall inform the consumer about the services

offered by the Office of the Arbiter for Financial Services established

by the Arbiter for Financial Services Act, which is competent to deal

with disputes concerning the rights and obligations arising under these

regulations.

(4) The information referred to in sub-regulation (3) shall be

mentioned in a clear, comprehensive and easily accessible way on the

website of the creditor, where one exists, at the branch, and in the

general terms and conditions of the contract between the creditor and

the consumer. The information referred to in sub-regulation (3) shall

also specify how the consumer can access further information on the

Office of the Arbiter and on the conditions for using such services.

Without prejudice to regulation 38, a consumer may resort

to the Office of the Arbiter for Financial Services for the settlement of

a dispute with a creditor concerning the rights and obligations arising

under these regulations.

(1) These regulations and any rules issued thereunder

shall apply to equity release financial products offered by creditors

after the coming into force of these regulations.

(2) Creditors which, on the coming into force of these

regulations, are performing activities regulated by these regulations,

shall, within one (1) year from the date of coming into force of these

regulations, comply with these regulations and any rules issued

thereunder.