MFSA is not empowered to give investment advice – chairman

Malta Financial Services Authority chairman Joseph Bannister has emphasised that the MFSA’s regulatory role is to ensure that there are adequate disclosures and a fair presentation of the risks involved in an investment.

In an interview with The Times Business in the aftermath of Bank of Valletta’s offer of compensation to investors in the underperforming La Valette Multi Manager Property Fund he points out that any decision to invest or not lies with the investors themselves after seeking the advice of licensed advisors.

“It is important that investors understand this. No regulator is empowered to give investment advice and it would be very unwise to do this,” he stresses.

The MFSA, Prof. Bannister says, does not sanction or approve such offers. Prof. Bannister says there are no easy answers to the complex issues surrounding the MFSA’s investigations of Valletta Fund Management as manager of the La Valette Multi-Manager Property Fund and Bank of Valletta as custodian of the fund for possible breaches of investment services rules.

“Unfortunately, the facts surrounding this case have become distorted. Recent features in the media have tended to be more populist than correct or fair and laws are being rather imaginatively and selectively quoted and interpreted. Regardless of this, the MFSA has to carry on, and we have to try and fulfil our statutory functions in the most complete and professional manner possible,” he says.

A week ago the MFSA fined BoV €347,816 for regulatory breaches in relation to its property fund, which the bank has decided to appeal. Asked when he expected the MFSA to conclude its investigation into the two other issues being looked into, namely allegations of mis-selling and of people who may have sold their shares in the fund on the basis of information which was not available to the public Prof. Bannister says:

“Indeed, rather than pandering to often uninformed media and other pressures from Finco Treasury Management Ltd and other persons, it is vitally important that the MFSA continues its work in a manner that can best ensure that its deliberations, reports and decisions are well-founded, coherent and perfectly valid at law, not only because this is the way it should be, but also because the MFSA’s decisions are being vigorously contested.

Prof. Bannister says he thinks people tend to expect too much from the MFSA which has been aware of these unduly high expectations for a long time “and we have to deal with it”.

He adds: “But the MFSA has no magic wand to enable it to resolve complex financial issues swiftly, reach conclusions in a couple of days, ignore due process and order compensation and make everybody happy.

The world we inhabit and the sector we regulate is more complex than that and there are no short cuts whatever reports in the media may suggest or say. We have to take responsibility for and defend our decisions and not the media or whoever is shouting the most.”