The Malta Financial Services Authority has rejected claims made by a European Commission report which said its ability to supervise internationally-oriented business was under pressure.
For months the authority has been co-operating with regulators in other EU jurisdictions whenever an insurance company wanted to offer services there, MFSA chairman Joe Bannister told Times of Malta.
The report said the ability of a relatively small supervisory authority to oversee a large system, in particular in the insurance sector – but also in the banking sector – was under pressure.
However, Prof. Bannister said that while the MFSA could do with more resources, the Commission’s comments were not aimed at local activity but at that offered by firms providing cross-border services to other jurisdictions.
A few months ago, the European Supervisory Authorities had expressed concern about the possibility of regulatory arbitrage when there was considerable cross-border activity from jurisdictions like Malta, Ireland, Luxembourg and the UK.
The Commission’s comments were not aimed at local activity but at that offered by firms passporting to other jurisdictions
Last January, the European Insurance and Occupational Pensions Supervisory Authority (EIOPA) following consultation with the national supervisory authorities, issued a decision on the collaboration of the insurance supervisory authorities.
This decision requires the supervisory authorities which are members of EIOPA to cooperate and use “as effectively as possible” all information available for supervisory purposes to achieve the objectives of insurance supervision, in particular adequate protection of policyholders and other stakeholders and financial stability.
The decision sets out the information and documentation that is to be exchanged by supervisory authorities to ensure effective cross-border cooperation between the supervisory authorities.
Prof. Bannister explained that MFSA was a signatory to this decision and had even extended collaboration with a number of European insurance supervisors, relating to the supervision of Maltese insurance firms passporting in Europe.
"This collaboration even extended to the MFSA hosting a number of meetings with European supervisory authorities to exchange information for facilitating the supervisory process," he said.
He further explained said that a licence was only given following receipt of feedback from the relevant regulators and that the MFSA would likewise have to approve any activities to be added in further countries of operation.
“This is what the Commission is referring to when they say ‘effective supervision’ and it is something that we have been doing since Malta’s accession to the EU,” he said.
The Prime Minister said yesterday that Prof. Bannister was to step down at the end of this year. He has been the head of the MFSA since its inception in 1999. The Nationalist Party have vowed to replace him if it is elected on June 3.