The Malta Independent 18 June 2024, Tuesday
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Financial Services Arbiter: The wrong man for the job

Kevin Aquilina Sunday, 14 May 2023, 09:16 Last update: about 2 years ago

By means of press release 230619 of 28 April 2023, the Ministry for Finance and Employment announced that Alfred Mifsud had been appointed as the second Arbiter for Financial Services, replacing Dr Reno Borg.  The press release stated that: ‘Mr Mifsud has vast experience in this sector. He has held several senior positions in different institutions, including Governor of the MFSA Board and Deputy Governor of the Central Bank of Malta, among others’.


What the press release failed to mention was that Alfred Mifsud’s appointment was in breach both of the spirit and the letter of the law that established the Office of the Arbiter for Financial Services. Indeed, when the functions of the Arbiter for Financial Services are studied, one entertains serious doubts as to the competence that Alfred Mifsud enjoys for the position that he has been appointed to. Article 14(2) of the law that establishes this office requires that its incumbent has ‘a general understanding for law’. Indeed, it is difficult to make a feeble case that he is fit for purpose as explained below.

First, there is no merit in his appointment. The DOI press release has not quoted what academic qualifications Alfred Mifsud has for the job. Does he possess qualifications in law that would have made him knowledgeable of the law as Chapter 555 of the Laws of Malta specifically requires as one of the qualifications that the Arbiter should have to qualify him for the job? The reply is in the negative. Hence, the appointment is based neither on merit nor expertise in law which is a fundamental requisite for the appointment of Arbiter. His appointment is intrinsically illegal.

Second, Alfred Mifsud has been handpicked for the job. Has any due diligence exercise been carried out to ensure that he has the moral gravitas to hold that office? Once again this must be answered in the negative. It has been reported in the local press – and has not been neither denied by government nor by the Office of the Arbiter – that Alfred Mifsud for 66 times has been found in breach of financial services legislation by his predecessor in office Dr Reno Borg and such rulings have been invariably confirmed by the Court of Appeal. Hence, if Alfred Mifsud is a serial transgressor of Financial Services Legislation and so confirmed by the Arbiter and the Court of Appeal, why has he been appointed to the Office of Arbiter for Financial Services when that office has to be impartial? Impartiality implies that Alfred Mifsud must not entertain a conflict of interest. But how can he administer justice when he has such a dismal record of compliance with financial services legislation?

Third, the duties that an Arbiter for Financial Services performs in terms of law are of a quasi-judicial nature. The Arbiter must, without any shred of doubt, be well versed in Financial Services Legislation, be knowledgeable in Civil Law, Civil Procedure, Consumer Law, Human Rights Law, and other areas of the law that are pertinent to the exercise of the duties of office. A study of past decisions of the Arbiter clearly demonstrates this.

Alfred Mifsud has no qualifications in law. So how can he decide legal points that will surely be raised before him as they have been raised before his predecessor in office? His predecessor, Dr Reno Borg, was a seasoned lawyer who specialised in different areas of the law and an academic. Undoubtedly this was an asset for him and for the parties who appeared before him that enjoyed the right to an Arbiter who knew the law that he was called to administer inside out. In legal literature, when the right to an independent and impartial judge is studied, this right is invariably combined with the right to a trained judge in the area in which s/he has been called upon to decide. Of course, the government will retort that Alfred Mifsud has practiced in the area of financial services – and that is undoubtedly true – but his practice has been censored 66 times over by the first Arbiter for Financial Services and the Court of Appeal. So how come a person who has such a dismal track record, a recidivist par excellence (if I can borrow a term from Criminal Law), be appointed to the Office that has found him in breach of Financial Services Legislation for 66 times? This is also a demotivating factor to the employees of that office who must serve under a person who flouted financial services legislation with impunity.

Fourth, can his past competitors and past clients perceive Alfred Mifsud to be objectively impartial? The Arbiter is called upon to deal with consumer complaints. However, in his past practice, he was never on the side of consumers and it is the latter who day in day out were complaining against him before the Office of the Arbiter for Financial Services. Now will the new Arbiter continue to be their worst enemy? Even if he were to change course, will consumers trust him that he will act impartially and afford them a fair trial? One has also to bear in mind that the Arbiter for Financial Services hears international cases, not only domestic ones. How will the international community judge the competence, expertise, and legal knowledge of Alfred Mifsud? How will he be judged by his peers in the European Union and international fora? How will the EU look at this appointment once EU law forms part of Financial Services Legislation?

Fifth, the Arbiter for Financial Services exercises powers that are ordinarily conferred upon a Judge of the Superior Courts. Once again, how can a person with no legal background let alone in-depth study of the law rule upon all the diverse legal points that will be raised by any of the parties to those proceedings? Will he engage a full-time lawyer to decide the cases on his behalf or will he contract out those decisions to advocates in private practice so that they will write the decision for him and he would only have to read it out or sign the decision when delivered to him? And if he were to adopt this procedure, his office would become irrelevant as it would not be the Arbiter who is deciding consumer complaints but a hidden third party unknown to the parties to the dispute; it would raise other serious constitutional issues as to the independence and impartiality of the office and of the proceedings once decisions are not arrived at by the Arbiter himself but following legal advice to that effect; and it would make a mockery of the whole office of the Arbiter for Financial Services that has, for the past seven years, served the country well. Indeed, I have never read of any criticism against the Office of Arbiter of Financial Services when headed by Dr Reno Borg, which obviously means that there were no issues raised as to Dr Reno Borg’s competence, experience, impartiality, independence, and integrity.

With Alfred Mifsud’s appointment as Arbiter for Financial Services, several issues will be raised as to his suitability for office. What will inevitably happen is that his appointment will be one day challenged in court and the day will come that the only option available for him would be to resign from office. Until that day comes, the harm that his appointment will cause to Malta’s reputation of a country that takes seriously its financial services sector will be too late to address thanks to government’s bad choice to appoint Alfred Mifsud as Arbiter for Financial Services and to Alfred Mifsud himself who did not have the decency to refuse the offer once he is not fit for purpose.

Hence my sincere appeal is that Alfred Mifsud should reconsider his position afresh and for the benefit of the country and his own interest do the most honourable thing to do in the circumstances once government and himself have embarrassed Malta and its financial services regime – to resign, the sooner the better, hoping that whoever is appointed in his stead is appointed only on the basis of merit and fulfils all the criteria for office after having completed successfully a thorough due diligence test. Government should publish any due diligence test that it has carried out before appointing Alfred Mifsud as I am convinced that none has been done.


Kevin Aquilina is Professor of law at the Faculty of Laws of the University of Malta


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