Common terms you will come across in this Q&A:
Maltese Cross Financial Services Limited
|“ICS” or “the Scheme”||Investor Compensation Scheme|
|“MFSA” or “the Authority”||Malta Financial Services Authority|
|“Investor” or “claimant”||clients of the Firm who have entrusted money or investments in connection with the Firm’s licensed business|
|“the Regulations”||the Investor Compensation Scheme Regulation – Legal Notice 368 of 2003|
1. What is Maltese Cross Financial Services Limited and what has happened to it?
Maltese Cross Financial Services Limited is a Maltese registered entity holding a Category 2 licence.
On 7 August 2014, the MFSA announced that it had suspended the operations of the Firm with immediate effect.
The Malta Financial Services Authority has, on 11 August 2014, made a determination to the effect that Maltese Cross Financial Services Limited is unable, for the time being, to meet its obligations arising from claims by its investors for reasons which are directly related to its financial circumstances.
2. What does this mean for clients of Maltese Cross Financial Services Limited?
MFSA has determined that Maltese Cross Financial Services Limited is unable to repay money owed to or belonging to investors and held on their behalf in connection with licensed business; or return to investors any instruments belonging to them and held, administered or managed on their behalf in connection with licensed business.
Clients of Maltese Cross Financial Services Limited are likely to have had their investments registered either:
For both these scenarios, the MFSA is currently investigating whether the Firm has properly executed its clients’ instructions.
3. What is the Investor Compensation Scheme? (updated 18 August 2014)
The Investor Compensation Scheme is a rescue fund for customers of failed investment firms which are licensed by the MFSA. The Investor Compensation Scheme Regulations determine the conditions for eligibility to such compensation. The maximum compensation that may be payable by the Scheme amounts to €20,000, or ninety per cent of an investor’s eligible claims, whichever is the lower. By paying compensation, the Scheme will be subrogated to the claimant’s rights against Maltese Cross Financial Services Limited – this means that, when applying to recover any money from Maltese Cross Financial Services Limited, the Scheme will ‘step in the shoes’ of the claimant’s rights up to the amount of compensation paid.
The investor’s rights in regard to any other amount for which he has not received payment from the Scheme will neither be transferred to the Scheme nor prejudiced in any manner. This applies even for those investments which the investor chooses not to include in his claim for compensation. It is therefore advisable that the investor should seek legal advice to assert his rights at law.
The Scheme is based on the EU Directive 97/9 on investor-compensation schemes.
4. Will all investors of the Firm be eligible to receive compensation from the Scheme?
Generally, all retail investors are eligible for compensation.
However, there are a number of investors who are not entitled for compensation. These are listed hereunder:
If you are an investor using the Firm’s services and do not fall under any one of the categories listed above, then you can lodge a claim with the Scheme.
5. How do I make a claim against Maltese Cross Financial Services Limited with the ICS?
The Investor Compensation Scheme has published notices in all major newspapers informing eligible investors on how they may apply for compensation from the Scheme.
You must fill in the application form if you want to claim compensation. The application form asks the claimant to set out key information to support his/her claim, such as details and evidence of the investments. The claimant will also be asked to send further evidence to support their claim, such as:
The more information you give the Scheme, the easier it will be to deal with your claim. This evidence is required by the Scheme in order to verify the individual’s claim against other evidence held by the Scheme.
It is very important to fill in the form fully. If you leave out any of the information we ask for, we will return the form to you. This may delay your application for compensation.
In the eventuality that an investor no longer holds the original contract note relating to the investment/s, because it has been either lost or misplaced or has not as yet been sent by the Firm, the investor shall provide the Scheme with other documentary evidence (such as cheque images, bank statements or a receipt issued by the Firm) which proves that the investment has indeed been made. It will be at the discretion of the Scheme to decide whether the documentary evidence provided is satisfactory and each claim will be dealt with on a case by case basis.
The application form, duly completed and signed, should be submitted by registered mail or by hand as follows:
Investor Compensation Scheme
c/o Malta Financial Services Authority
Attard BKR 3000
Re: Claim relating to Maltese Cross Financial Services Limited
6. Do I have to pay anything to have my claim considered by the ICS?
No. The Scheme does not charge investors for using its service.
7. Does the Scheme cover companies as well as individuals?
Most retail investors are covered whether they are individuals or companies. Our answer to Question 4 lists some categories of investors who are not covered. However, companies which are permitted to draw up abridged balance sheets in terms of the Companies Act are also covered by the Scheme.
8. How will the ICS determine whether I am eligible for compensation?
Once the Scheme has received a completed application form, it will proceed to assess the claim to determine whether the claimant is eligible for compensation under the Scheme’s rules.
All claims will be considered on a case-by-case basis, based on the information presented in the application form along with any accompanying evidence.
The Scheme will have to check carefully every claim for compensation and ensure that every claim is covered by the regulations before it can process it and issue a refund in terms of the Regulations. If you are not eligible for compensation under the regulations, we will write to you and explain why.
9. How long will it take for my claim to be settled?
It is advisable that you make your claim at your earliest opportunity. Assuming that you will do so, the Scheme should be able to proceed with the payment of verified claims within three months of the date of the determination.
The Scheme may, in exceptional circumstances, request MFSA to briefly extend this period.
10. What is the level of protection provided by the ICS?
The maximum compensation that may be payable by the Scheme amounts to €20,000, or ninety per cent of an investor’s eligible claims, whichever is the lower. By paying compensation, the Scheme will be subrogated to the claimant’s rights against Maltese Cross Financial Services Limited. The amount of payment is regulated by LN368 of 2003.
11. Do I have other available means of redress?
Investors should seek legal assistance when determining whether to accept compensation from the Scheme and when considering whether they have other available means of redress.
12. What if an investment is held in joint names or a trust, or my holdings are held under nominee? (updated 14 August 2014)
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, subject to eligibility.
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. In this regard, full disclosure of the underlying beneficial owners need to be provided in support of a claim together with supporting documentary evidence.
13. How will compensation be paid to me? (updated 27 August 2014)
Your application for compensation will be carefully verified to determine its eligibility. Once this is established, the Scheme will write to inform you that payment may be made upon a subrogation of your rights in favour of the Scheme.
The Investor Compensation Scheme will, on paying any compensation, be subrogated in your rights and claims against Maltese Cross Financial Services Limited and against any other party solely with respect to the recovery of the compensation paid to you by the Investor Compensation Scheme. The aforesaid subrogation shall not prejudice any claims that you may have for amounts in excess of the amount paid to you by the Investor Compensation Scheme.
You will be able to choose between receiving payment by cheque or bank transfer.
The Scheme is obliged to pay eligible investors in the currency of their investment.