The Malta Financial Services Authority has issued a Dear CEO letter setting out the results of its first-year Outcomes-Based Supervision thematic review of corporate Tied Insurance Intermediaries (TIIs) distributing long-term (life) insurance products. The review identifies areas of generally good practice alongside gaps in sales processes, disclosures, remuneration arrangements and client interactions, and it clarifies supervisory expectations for both TIIs and the insurance undertakings that appoint them. The assessment covered 31 corporate TIIs and examined sales processes, governance, disclosures, remuneration structures, client interactions and oversight arrangements, including the responsibilities of insurance undertakings. Most TIIs met requirements such as conducting demands and needs assessments and providing relevant disclosures, but limited awareness of certain disclosure obligations and insufficient record-keeping of client meeting notes were observed. Remuneration was typically commission-based, but a minority charged additional client fees without consistently having documented procedures to justify and classify those fees, prompting an emphasis on transparency and monitoring to mitigate conflicts of interest and mis-selling risk. Client contact practices included cold calling by 26% of TIIs and home visits by 23%, with concerns also raised about pension product switching encouraged through cold calling and a reminder that TIIs must not exert undue pressure and must comply with Conduct of Business Rulebook requirements. TIIs authorised to provide investment advice were generally able to evidence suitability testing, while some non-advisory TIIs lacked adequate evidence of appropriateness testing or were uncertain about what constitutes regulated advice. Most advisory TIIs demonstrated a sound understanding of assessing sustainability preferences and documenting instances where clients amended those preferences, and 71% of TIIs clearly explained complaints handling procedures although some were not sufficiently familiar with the role of the Arbiter for Financial Services. All TIIs reviewed are expected to address the identified gaps during 2026, with a follow-up assessment planned for 2027. Insurance principals are reminded to maintain strong oversight, regular monitoring and appropriate training for staff and TIIs, and the Dear CEO letter is positioned as market-wide guidance, including for TIIs not directly assessed in 2025.
Malta Financial Services Authority 2026-04-13
Malta Financial Services Authority flags conduct, disclosure and remuneration gaps in outcomes-based supervision review of corporate tied insurance intermediaries
The Malta Financial Services Authority has issued a Dear CEO letter summarising findings from its first Outcomes-Based Supervision thematic review of corporate Tied Insurance Intermediaries distributing long-term life insurance products, highlighting good practices and gaps in sales processes, disclosures, remuneration and client interactions. It clarifies expectations on commission and fee transparency, conflicts of interest, cold calling and pension switching, suitability and appropriateness testing, sustainability preferences and complaints handling. All reviewed TIIs must remediate gaps in 2026, with a follow-up assessment in 2027, and the letter serves as market-wide guidance.