[WATCH] Banks can’t turn away legitimate businesses, Prime Minister says, as MFSA lays out new strategy

MFSA launches 2021 Vision for financial regulator

The Prime Minister has criticised banks which refuse to open bank accounts for foreign businesses, saying they had to be “agents for growth, not safety-deposit boxes”.

Addressing the launch of the Malta Financial Services Authority’s ‘Vision 2021’, targeted at preparing the watchdog for the next generation of financial services, Muscat said that banks had to be prudent, but proactive in their decisions.

He said it was “abundantly clear” that Malta needed more banks to service its growing economy, and to offer customers alternatives and a more efficient service.

“While fully understanding and supporting de-risking efforts, one cannot tolerate a situation where banks simply opt not to open accounts, which I would say is against EU rules, simply to avoid taking any risk,” he said.

Muscat welcomed the MFSA’s new strategy, which is setting the stage for the Authority to undergo an overhaul, including increasing staff training and equipping it with the latest technology, aiming to position it amongst the best regulators in Europe.

Muscat said that his presence during the launch “re-confirmed the government’s commitment to supporting the MFSA’s transformation and reform programme” enabling it to be amongst the best European regulators in the sector.

The Authority’s CEO Joseph Cuschieri said the time had come for the regulator to “evolve, modernise and look ahead with a sense of achievement” and to “take on board lessons learned”, in order to bring it closer to European standards of supervision. The new strategy will involve an ambitious change programme focused on innovation, investment in FinTech and RegTech, modernisation of supervision, and technological development, he said.

Amongst the principal changes planned is a greater investment in the development of the MFSA’s human capital.

“This is key to ensure that the MFSA is “right sized” in order to supervise more effectively a growing and evolving sector - making sure that we are equipped with the skills and competences necessary to navigate through growing complexity and increased regulation. Our HR strategy is focused on recruiting the best talent but most importantly in retaining and developing that talent,” Cuschieri highlighted.

A new organisational structure will soon be announced, he highlighted, bringing about changes which will strengthen its governance and define clearer lines of responsibility and accountability.

Moreover, investment in the latest supervisory technology, business intelligence and knowledge management tools will become mission critical to the success of the MFSA and Malta as a jurisdiction, he underlined. “We cannot talk about FinTech hubs, FinTech strategies, Malta as a centre of excellence and Blockchain but at the same time shy away from making the necessary investment.”

There are also plans for greater engagement with European stakeholders, which should lead to “sectoral reforms which are long overdue”, he said.

“This transformational journey is not only about rebranding, vision statements and strategic announcements - this is a real commitment to race to the top and reposition us as a top-tier European financial regulator,” Cuschieri added.

Creation of FinTech innovation hub

A consultation document outlining the Authority’s strategy for FinTech was also published, with the proposed introduction of a “FinTech Regulatory Sandbox” and the establishment of a FinTech innovation hub in Malta being amongst its key aspects.

The sandbox should be providing a platform where start-ups and firms can explore and test their business concepts in a specially-designed environment.

“Our aim is to provide a tailored approach to authorisation for innovative firms. [This] may include the provision of pre-application support to firms, or authorising them with restrictions, in order for such firms to test their business models and products in a controlled environment,” Cuschieri said.

Today’s launch also saw the unveiling of new corporate branding for the regulator, as well as plans for a new website providing an interactive platform which should make communication with financial market stakeholders easier.

Consultative body to be set up

Speaking at the launch, Financial Services parliamentary secretary Silvio Schembri said plans were underway for the creation of a consultative body, which would bring together the MFSA, the government, and those working in the sector for the purpose of discussing possible challenges in the sector at an international level.

“[This] will serve as a forum for discussions between the government, the regulator and the practitioners, in a bid to understand better the difficulties and anticipate any developments on the international scenario.” Schembri said.

The body will also strive to draw up a ten-year strategy for financial services monitoring, he said.