When allegations of impropriety are made against the financial services regulator the red bulb should light up.

Some allegations may turn out to be unfounded but a country with a thriving financial services sector that forms a crucial part of the economy cannot afford to leave dark clouds loom over such an important institution.

Storms are already forecast as the EU continues with its drive towards corporate tax harmonisation, which Malta is resisting, so allowing other issues to get into the way is not advisable.

Thus, whenever allegations of any sort are made against the Malta Financial Services Authority or its top officials, the government has a duty to look into the matter and provide satisfactory answers. When the accusations are made by a government minister, the matter becomes much more serious and must not only not be ignored but satisfactorily dealt with.

For weeks, Education Minister Evarist Bartolo has been accusing MFSA chairman Joe Bannister of impropriety and conflict of interest. The primary charges are of an ethical nature involving directorships Prof. Bannister holds in funds domiciled in the Cayman Islands, an offshore jurisdiction that was put on the EU’s blacklist last year and branded “non-cooperative”.

Mr Bartolo had first made these allegations in 2012. At the time, the regulator had insisted the directorships had always been disclosed and an explanatory note sent to then prime minister Lawrence Gonzi that was shared with the Opposition leader at the time, Joseph Muscat, was accepted by both sides. Prof. Bannister was retained and, in 2014, Dr Muscat, now Prime Minister, reappointed him for another five-year term.

Mr Bartolo has raised a number of points. He argues that vigilance by the MFSA on operators in the field has become lax and that Prof. Bannister has overstayed his term at the helm of the watchdog. He has been chairman for almost two decades.

Irrespective of the gravity or otherwise of the allegations made, what is likely to baffle casual observers is the apparent discord within the government on Prof. Bannister’s tenure.

One would have assumed that Mr Bartolo would have raised his concerns within Cabinet where he would have been given an explanation on why Prof. Bannister should be retained. If such an explanation was given it does not seem to have satisfied Mr Bartolo as he continues to publicly criticise Prof. Bannister and call for his resignation.

Regulators are there to ensure the standards in the respective sectors they oversee are maintained and to serve as a watchdog on the people’s behalf.

They should have operational independence from the government of the day and be driven by the public interest. The situation that has developed vis-à-vis the MFSA risks denting the credibility the institution has built over the years.

The solution is not silence, as most operators in the financial services sector seem to want. If something is wrong it has to be addressed and not swept under the carpet on the excuse that rocking the boat could damage the sector.

The country must fear the long-term damage from situations left unaddressed rather than the short-term pain of an open debate.

If the Bannister question has notbeen addressed effectively at Cabinet level, why not have the head of theregulator invited in front of a parliamentary committee?

There, MPs can put questions and demand answers. In this way, the air could be cleared publicly once and for all in a transparent fashion. This is one way of restoring trust in regulators.