The investment firm MFSP Financial Management has been fined €12,000 and banned from selling complex financial products for at least the next three years after the financial watchdog established it had wrongly sold certain products to unqualified investors.
The Malta Financial and Services Authority announced the action in a notice yesterday evening saying the company would be able to ask for a review of the restriction imposed on its licence in three years’ time.
However, the company reacted forcefully, saying it was consulting its legal advisors over the decision, which it regarded as “one-sided”.
“At the moment we can only express our disappointment that MFSA have adopted a one-sided approach in our regard by practically rejecting all the submissions we made so far. We disagree categorically with the decision communicated to us by MFSA this afternoon and we are currently in discussion with our legal advisors on the next steps,” the directors said in a statement.
The authority said its investigation into the company’s sales practices had established that in a number of instances, the company had “failed to act in the best interest of investors as required in terms of the applicable regulatory framework”.
Following a file review of certain clients, the authority concluded that there were instances when the company sold products that were inappropriate for its clients. It pointed out that the investors in these cases were not experienced or knowledgeable enough to understand the risks involved in the products they were buying.
“The findings represent a major concern to the authority, particularly when one considers that a number of transactions occurred after the authority had issued a circular on the sale of complex financial instruments in February 2009,” it said.
As a result the authority also asked for a review of the clients who invested in the AMR Assured Income Plan or the Arm Capital Growth Bond, two products sold by MFSP.