The Investor Compensation Scheme is a rescue fund for investors that are clients of failed investment firms licensed by the Malta Financial Services Authority (MFSA). We can only pay compensation if a licensed investment firm is unable or likely to be unable to pay claims against it. In general this is when the licensed firm stops trading or becomes insolvent.
The Investor Compensation Scheme is managed by a Committee appointed by MFSA. This Committee is made up of persons representing MFSA, the Central Bank, licensed firms, the banks and customers.
The Investor Compensation Scheme does not regulate licensed investment firms. Business conducted by investment firms licensed under the Investment Services Act is regulated by MFSA.
We aim to treat everyone fairly and openly. However we can only pay compensation according to the Investor Compensation Scheme Regulations (the Regulations). By explaining how these rules generally operate, we wish to prevent any misunderstandings or unrealistic expectations about what we can do.
Purpose of the Scheme
The Scheme is intended to promote confidence not only in licensed investment firms, but more importantly, in the financial system as a whole. It draws its justification from the fact that an investor is not generally in a position to make a comprehensive assessment of the risks affecting a licensed investment firm.
Firms covered by the Scheme
The following firms are covered by the Scheme:
The Management Committee of the Investor Compensation Scheme can also advise you if a firm participates in the Scheme. You can also click here to see a list of present participants.
(The EEA stands for European Economic Area. Created in 1994, the EEA combines the countries of the European Union and member countries of EFTA (European Trade Association). Countries that belong to the EEA are: Austria, Belgium, Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. Countries that are EEA member countries but NOT part of the European Union are: Norway, Iceland, Liechtenstein.)
Limits applicable in the event of a claim
The Scheme covers 90% of a firm’s net liability to an investor in respect of investments which qualify for compensation under the Investment Services Act subject to a maximum payment to any one person of €20,000.
A firm’s total liability to an investor is the aggregate of all accounts in the name of that investor in any currency, including the investor's share in a joint account or a client account.
Joint accounts are divided equally between account holders where there is no indication of the share of each holder in the account. Each will be covered up to the limits described above.
In respect of investments held by a person acting as trustee or nominee for one or more persons, the investment making up the claim shall be deemed to belong to the beneficial owners equally unless there exists specific information which may otherwise determine the beneficial interests of such persons.
The following will be deducted from the amounts payable under the Scheme:
Currencies covered by the Scheme
The Scheme covers investments in any currency.
Types of investments covered
Most types of investments are covered. Certain investments are not covered by the scheme, such as:-
Activation of the Scheme
The Scheme is activated upon the occurrence of one of the criteria prescribed in regulation 13 of the Investor Compensation Scheme Regulations. The most likely of these events is a Court’s decision to put the investment firm into liquidation. The Scheme will also be activated if the Malta Financial Services Authority, as regulator of investment firms in Malta, determines that a firm has been unable to meet its obligations arising from claims by its investors for reasons which are directly related to its financial circumstances and has no current prospect of being able to do so.
Points to remember
You cannot claim compensation on the basis of: