On Wednesday, Parliament discussed the second reading of the Various Financial Services Laws Amendment Bill, an item about which both parties were in full agreement. The Parliamentary Secretary for Finance Minister, Tonio Fenech explained how these amendments will lead to the implementation of a number of European directives, most importantly the Markets in Financial Instruments Directive, which will continue to widen the Maltese market to competition.
These directives, he said, are there so as to form a comprehensive common financial services market in Europe, this inevitably increasing Europe’s competitiveness. It will be like having “a single passport” – a concept which means that financial services will no longer have any borders or red tape and therefore can be sold anywhere in the union without the need for additional shackles. The bill will also create a solid, efficient and transparent basis for an ever-growing financial services market in Malta, an aim long sought by the government, possibly creating more investment within the country. These directives also provide a means for new players to compete within the market, as well as offer ways other than the traditional ones for investment.
Expounding upon certain measures within the bill, Mr Fenech highlighted how banks will need to be more prepared for the risks undertaken by their line of work, a measure which shall now become common to all banks. The single regulator, the MFSA (Malta Financial Services Authority), will be dealing with this aim on three pillars – regulation of banks, protection of the consumer and regard for the market.
As for client protection, an all-important element within the bill, this law ensures that these risks are mitigated and well encapsulated so as not to affect the client. “Clients will be protected in any EU member state, as the same rules apply all over.” New rules that must be adhered to, the Parliamentary Secretary described, are that clients should be well informed with regard to what it is they shall be doing with their money, hence enabling them to make an informed and comprehensive decision while being aware of the risks involved.
In the provision of information, it has to be ensured that it is not biased and in the client’s best interest. Clients also have the possibility to report injustices or unfairness done by these financial service firms. These complaints will be investigated, meaning that there are rules to adhere to regarding compliance, risk assessment, record-keeping and market control.
Mr Fenech also delved into how the amendments being presented also regard the Malta Stock Exchange.
MLP deputy leader for parliamentary affairs, Charles Mangion commended the objectives of the amendments, stating that they would ensure and “bring to the fore, uniformity and transparency in pricing, as well as in wages and salaries.” He also praised MEP Joseph Muscat’s involvement in the writing up of the directive, as well as its focus on consumer protection. “This bill ensures that there is no fraud, cheating or abuse, because there has to be internal supervision which must be implemented, hence safeguarding the consumer. This way the consumer will get his just return for his investment.”
Dr Mangion lay heavy focus on youths within the financial services sector, encouraging further education and specialisation in this regard. “Only with professionals will we be able to solidly compete within the European market.” He also highlighted how other sectors within this sphere may be expanded, such as the maritime and hospitality sectors. “The aim is not only to garner tourists to our islands, but to increase the quality of our service factor,” he said. The same, the Labour MP added, goes for the manufacturing sector.
The bill was then given a second reading.