In spite of the global economic crisis, the country's financial services industry has continued to expand and to be instrumental in the economic development of our country, to job creation, and to the building of a competitive infrastructure for the Island's financial services industry.
During the past year the MFSA, following the introduction of the Single Supervisory Mechanism under the ECB, has been working on the introduction of legislation and practice wide ranging initiatives at EU level which underpin a stronger focus on good customer outcomes in investment services, insurance and banking.
The current international emphasis on prudential regulation, that seeks to promote stable and fair markets, is a principle which also drives consumer confidence and fosters positive financial outcomes for consumers. However a new emphasis on conduct of business has been the initiative taken by the G20 in February 2011 which called on the OECD and other international institutions to develop common principles on consumer protection in the field of financial services.
The creation of a separate conduct regulator in the UK, USA and other jurisdictions reflects this new prioritisation for conduct of business in financial services. The MFSA will also embark during 2015 on a major internal restructuring exercise to reflect these international priorities. A number of reforms will be carried out in order to enhance the protection of consumers where these are disadvantaged in transactions with financial service providers. These will include: a] an enhanced institutional framework; b] an improved regulatory framework and c] a strengthened enforcement regime.
The MFSA is currently preparing legislative proposals for the adoption of a conduct of business regime and the revised MFSA Act will also establish a more defined enforcement process and an internal audit function as required under the ECB to enhance the systematic evaluation of MFSA's governance processes, internal controls and risk management.
The proposed legislative changes together with the set of rules for enforcement and conduct of business rules will be published for consultation in 2015.
The proposed changes will be supported by the setting up of the Financial Services Arbiter. The MFSA has made recommendations to Government for the setting-up of this Office will be a specialized, single and independent dispute-resolution authority.
The MFSA also faces the challenge to continue making Malta attractive for international finance. The Authority has been reviewing insurance legislation for sometime as part of its efforts to introduce innovation within the existing EU legislation. Specific legislation for re-domiciliation of insurance companies followed bythe Protected Cell Company legislation and more recently as part of the drive to introduce Capital Markets activity, legislation for Re-insurance Special Purpose Vehicles was introduced. However, this latest introduction - the Securitisation Cell Company legislation allows Securitization Vehicles to set up cell structures . This is a unique type legislation not available in any other jurisdiction as it allows a single cell to issue separate tranches, to transact in different currencies and keep accounts in the currency of choice. The Securitization Cell Company is also applicable for all types of securitization transactions.
Various other pieces of legislation and rules are expected to be published during 2015. Regulations regarding a revised Companies Act Tenth Schedule for the establishment of investment funds as Limited Partnerships are expected in the new year as also the Rules for Personal and Occupational Pensions under the Retirement Pensions Act. These Rules aim to further enhance the development of the international pensions sector.
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