Lock­ing the stable door

The Malta Business Weekly - - LEADER / OPINION -

We re­pro­duce to­day (page 6) 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.

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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