In the first of a three part in depth look of the Maltese economy Commercial Risk Europe (CRE)'s latest edition focused on the insurance sector and the island's readiness for Brexit.
In view of the decision taken by UK voters to leave the European Union, the article also considers the potential benefits for Malta following such vote. CRE argues that this vote may trigger the relocation to Malta by UK companies first as a protective measure and then possibly on a long-term basis. In this regard, MFSA Chairman Prof Bannister noted that firms in the fund industry "could remain based in other domiciles but could establish equivalent funds here to sell into Europe. If other domiciles do receive passporting rights, then this would not be necessary, but it is an option to consider".
In 2015, 92 companies transferred their domicile to Malta, of these 78% came from non-EU countries. Turning on the insurance sector, the report remarks that despite the challenges posed by Brexit and the introduction of Solvency II, Malta continued to report positive results. Economically, Malta expanded by 6.3% over the previous year in real terms, a multi-year high.
The report also looked at the positive review by the Global Competitiveness Report, published by the World Economic Forum, putting Malta amongst the best 20 jurisdictions in terms of the soundness of the banking system and for the strength of auditing and reporting standards. CRE notes that in an era of high scrutiny of financial centres and tightening rules on tax and transfer pricing the best strategy for financial centres was to aim for the best regulation possible.
On this issue, Prof Bannister noted that "the best course for Malta is to not only maintain its reputation but to enhance it", explaining how the Authority is strengthening its regulatory and supervisory regime in the past months, referring to the introduction of the Bank Recovery and Resolution Directive as well as the creation of the Resolution Authority, Resolution Committee and Resolution Unit: "There is no doubt that prudent regulation which promotes stable and fair market, also drives consumer confidence".
The report also refers to the creation of a Conduct Supervisory Unit, dedicated to the proper conduct of business in financial services as well as the implementation of CRDIV/V, MiFiD II, the Transparency Directive and UCITS V.
The full report is available on the MFSA website on: http://bit.ly/2f4ndhF
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