The Malta Independent 13 December 2018, Thursday

TMBW Editorial: Locking the stable door

The Malta Business Weekly Thursday, 6 December 2018, 09:12 Last update: about 7 days ago

We reproduce today an interview with the new Chief Executive Officer of the Malta Financial Services Authority, Joseph Cuschieri which appeared in last week's issue of The Malta Independent on Sunday.

Malta Financial Services Authority CEO Joseph Cuschieri contends that a reform of the country's banking legislation is needed in order to modernise Malta's legal and regulatory framework.

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Mr Cuschieri contends that a reform of the country's banking legislation is needed in order to modernise Malta's legal and regulatory framework.

Mr Cuschieri says that a new banking strategy to be introduced next year, along with a policy review, will address the multiple challenges being faced by the sector "in a holistic fashion" and that consultations will be held with all those involved before any decisions are taken.

"There is room for improvement in banking supervision," he says, "but rather than focusing on individual cases, we need to take a long-term view of the banking sector in Malta and decide where we see Malta as a jurisdiction for banking services.

"There are key things to learn that can help us address future challenges and risks. The banking situation in Malta is high on our agenda and I intend putting together a new policy and strategic framework that takes stock of the current situation (from the standpoint of competition, quality of service, innovation, governance, risks and portfolio of services offered) but also articulates a strategy focusing on innovation, governance, service quality and the competitive landscape."

Talk of shutting the door after the horses have bolted!

When all the world has heard of the multiple failures by Malta's regulatory authorities (to be fair, before Mr Cuschieri was appointed to this post) and this has been criticized far and wide not least by the European Central Bank and the European Banking Authority, this is quite rich.

The Maltese banking regulator was held responsible for licensing the Pilatus Bank (which had until yesterday to appeal against the sentence condemning it, and so far there is no news of any appeal).

Probably over-reacting against the world-wide negative publicity, the MFSA later came down like a ton of bricks on Satabank and, in the process many investors and companies faced and still face many difficulties and problems.

Although Mr Cuschieri is quite right when he says that "action had to be taken in order to protect the integrity of our financial system and the interests of depositors" and there were indeed issues regarding the bank, not least with regards to some of its clients, the action against the bank, mishandled because innocent clients and customers were hurt as a result, is widely perceived out in the world as a knee-jerk reaction by an authority whose good name had been blackened by the Pilatus Bank saga.

Mr Cuschieri comes across as looking ahead to reforms in the future, but never once, in the long, 1500-word interview, does he admit the multiple failures of the Maltese regulatory authorities which have allowed so many scandals to persist. Nor, in his name, does MFSA apologise for all this.

What is the use of new legislation if we do not admit first of all that the old legislation, reached by unison by the two parties in Parliament, broke down not because of faultlines in it but by something else - and we say it and defy Mr Cuschieri and MFSA to deny this - by multiple interference by political masters.

Instead, Mr Cuschieri prattles on that "our success in the IIP programme, online gaming and crypto asset space is due to the robustness and transparency of our legal/regulatory framework and underlying ecosystem. Malta's forward-looking approach in these sectors and our drive to innovate makes Malta an attractive jurisdiction. In my view, Malta is open to good and reputable business: shady outfits are definitely not welcome."

There is nothing in what he has said that gives us hope that the financial services sector, born out of joint action by Malta's two parties, bred by the hard work of so many practitioners, and, until yesterday, our pride in the world, can look forward to a future where the lost good name can be restored.     


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