MT
EQUITY RELEASE FINANCIAL PRODUCTS REGULATIONS
Table of Provisions (44)
Statutory Text (44 Articles)
SUBSIDIARY LEGISLATION 376.06
EQUITY RELEASE FINANCIAL PRODUCTS
REGULATIONS
1st September, 2019
LEGAL NOTICE 193 of 2019.
(1)
The title of these regulations is Equity Release
Financial Products Regulations.
(2)
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
EQUITY RELEASE FINANCIAL PRODUCTS
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]
EQUITY RELEASE FINANCIAL PRODUCTS
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
EQUITY RELEASE FINANCIAL PRODUCTS
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
EQUITY RELEASE FINANCIAL PRODUCTS
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"
EQUITY RELEASE FINANCIAL PRODUCTS
(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
EQUITY RELEASE FINANCIAL PRODUCTS
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
EQUITY RELEASE FINANCIAL PRODUCTS
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
EQUITY RELEASE FINANCIAL PRODUCTS
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 Authority Act;
"consumer" means any individual who has attained
pension age, as defined in the Social Security Act, and who is
acting for 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;
EQUITY RELEASE FINANCIAL PRODUCTS
"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 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;
EQUITY RELEASE FINANCIAL PRODUCTS
"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
EQUITY RELEASE FINANCIAL PRODUCTS
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
products consisting of equity release credit agreements where the
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;
EQUITY RELEASE FINANCIAL PRODUCTS
(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.
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 out the functions and duties prescribed by these regulations and
to ensure that creditors carrying out their activities in Malta comply
with 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
(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,
EQUITY RELEASE FINANCIAL PRODUCTS
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
competent authority may, on producing, if required, evidence of his
authority
(a)
enter any premises occupied by a person on whom
a notice has been served in terms of regulation 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
compliance with these regulations.
When information is provided to consumers in
compliance with the requirements set out in these regulations, such
information shall be provided free of charge to the consumer.
(1)
When manufacturing and distributing equity
release financial products falling within the scope of these regulations
in accordance with regulation 3, or granting or providing advisory
services on equity release financial products and, where appropriate,
ancillary services to consumers or when executing an equity release
financial product, the creditor shall act in accordance with the
following principles
Good faith, honesty and
The creditor must conduct its business in
(a)
integrity
good faith, with honesty and integrity.
The creditor must conduct its business with
Professionalism, skill,
(b)
professionalism, due skill, care and dili-
care and diligence
gence.
The creditor must take reasonable care to
organise and control its affairs responsibly
(c) Management and control
and effectively, with adequate risk manage-
ment systems.
The creditor must observe proper standards
(d) Market conduct
of market conduct.
The creditor must pay due regard to the
Consumers' rights and
(e)
rights and interests of its consumers and
interests
treat them fairly.
The creditor must pay due regard to the
Communications with
information needs of its consumers, and
(f)
consumers
communicate information to them 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 they
(g) Conflicts of interest
cannot be avoided, the creditor must dis-
close them to the consumer and disclose
the steps taken to mitigate them.
The creditor must take reasonable care to
ensure that the advice is suitable for the
Consumers: relationships
(h)
consumer who is entitled to rely upon its
of trust
judgment. Any suitability assessment car-
ried out must be properly documented.
The creditor must arrange adequate protec-
(i) Consumers' assets
tion for consumers' assets when it is
responsible for them.
The creditor must deal with the competent
authority in an open and cooperative way,
Relations with the com-
and must disclose to the competent author-
(j)
petent authority
ity appropriately anything relating to the
creditor of which the competent authority
would reasonably 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
EQUITY RELEASE FINANCIAL PRODUCTS
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
keep up-to-date an appropriate level of knowledge and competence in
relation to the manufacturing, the offering or granting of equity release
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
personalised information needed to compare the equity release
financial products available on the market, assess their implications
and make an informed decision on whether to conclude a credit
agreement
(a)
without undue delay after the consumer has given
the necessary information on his needs, financial situation and
preferences;
(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
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)
Regulations, the description of the main characteristics of the financial
service to be provided in accordance with sub- paragraph (ii) of the
proviso to sub-regulation (3)(a) of regulation 5 of the Distance Selling
(Retail Financial Services) Regulations, shall include at least the items
referred to in sections 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 consumer on the proposed equity release financial product and any
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;
EQUITY RELEASE FINANCIAL PRODUCTS
(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 legislation, personal data obtained from a consumer or any
other 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 Malta are used where they carry out a property valuation,
or shall take reasonable steps to ensure that those standards are applied
where a valuation is conducted by a third party.
(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 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
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
practices shall be prohibited.
(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
calculated in accordance with the mathematical formula set out in the
Second Schedule.
(2)
The costs of opening and maintaining a specific account,
of using a means of payment for both transactions and drawdowns on
that account and of other costs relating to payment transactions shall
be included in the total cost of credit to the consumer whenever the
opening or maintaining of an account is obligatory in order to obtain
the credit or to obtain it on the terms and conditions marketed.
(3)
The calculation of the annual percentage rate of charge
shall be based on the assumption that the credit agreement is to remain
valid for the 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
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
(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, the competent authority may impose an administrative fine, issue
such 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
website and, or in any other media as it considers appropriate, any
administrative fines imposed under the provisions of these regulations.
Such publications shall include information on the type and nature of
the breach and the identity of the person on whom the administrative
fine is imposed, without undue delay after that person is informed of
those penalties
Provided that in cases where an appeal has been filed by
the person on whom such administrative fine or fines have been
imposed, the 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
circumvented in a way which could lead to consumers losing the
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 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.
EQUITY RELEASE FINANCIAL PRODUCTS