Investors should be extremely vigilant before committing their monies to investments whose performance was linked to assets, such as life insurance policies or currencies, the Malta Financial Services Authority warned.

It said in a statement that despite the fact that they may be promoted as “alternative” to traditional or conventional investments, these were investment opportunities which involved substantial risks, in particular liquidity risks, whereby the investor might be unable to sell his investment.

Potential investors should pay particular attention to a number of characteristics describing these products and should not presume that the payment of interest and capital was guaranteed, unless such promises were clearly labelled, the MFSA said.

It said that when it came to redemption of these investments, these were always of a medium/long term nature and generally restricted the investor from selling his holdings before the investment matured.

Investors also had to pay particular attention to technical terms such as “lock-up periods” or “redemption gates”.

Although the MFSA addressed its concerns directly with the financial entities promoting these products, investors should be extremely vigilant before committing their monies to these investments and should make sure that they read and understood the product documentation given to them prior to any potential investment.

Investors who were unable to understand the documentation, should not buy such investments.

The MFSA said consumers should be aware that the characteristics of these products made them unsuitable for unsophisticated investors. These products were generally considered appropriate for investors who had the experience and knowledge to understand how the financial instruments worked and could afford to take the relevant related risks