Ministry for Finance proposes revised contribution model for Investor Compensation Scheme

Proposed changes aim to strengthen the scheme

The Ministry for Finance has set out a revised funding model for Malta’s Investor Compensation Scheme, aimed at strengthening its financial capacity while maintaining protection for eligible investors.

The proposals were published on 18 August 2026 under Government Notice No. 2049 in Government Gazette No. 21,703. They form part of the proposed Investor Compensation Scheme (Amendment) Regulations, 2026, which would amend the existing Investor Compensation Scheme Regulations, S.L. 370.09.

Mandatory participation would apply to Class 1, Class 1 Minus, Class 2 and Class 3 investment firms, as well as credit institutions authorised to provide investment services and fund managers providing certain MiFID-related ancillary activities to retail clients.

Fixed contributions range from €5,000 to €40,000

Under the proposed model, annual fixed contributions would vary according to the type of licence and the activities carried out by each participant.

Class 3 investment firms would pay €5,000 a year, while specified Class 2 firms, credit institutions not authorised to deal on their own account and fund managers would contribute €7,000. Class 2 firms and credit institutions authorised to deal on their own account would pay €22,000, while Class 1 and Class 1 Minus firms would face the highest annual contribution of €40,000.

Fixed contributions would generally be due by 31 July each year, or within 30 calendar days from the date a participant becomes subject to the contribution requirements. Newly licensed participants would be exempt from contributions during their first year of licensing.

Revenue-based contributions and emergency reserve introduced

The proposed framework would also introduce a variable contribution equal to 0.1% of revenue related to investment services activities, alongside an Emergency Drawdown Reserve equivalent to 1% of the same revenue. The reserve would have to be held in cash or cash equivalents and made available to the scheme within 30 calendar days when required.

Extraordinary contributions of 0.15% could also be imposed in exceptional circumstances. The scheme would be able to request a higher amount after consulting the Malta Financial Services Authority. A separate contribution towards management expenses could also be requested where available funds are considered insufficient to meet those costs.

Importantly, the changes are not yet brought into force by the explanatory notes themselves. The Ministry states that the amendments will take effect once the relevant legal notice is published in the Government Gazette. It also makes clear that the explanatory notes are not a substitute for the final legal instrument.