When the new chairman takes over at the Malta Financial Services Authority at the end of March 2018, he faces a tight agenda to give this organisation a better image in the coming years.

John Mamo has the right credentials to define and execute a practical strategy for the financial services regulator as his past and present academic and business success is acknowledged by most of those who have worked with him.

At the top of his agenda should feature the restoration of Malta’s image among local and foreign financial services operators as a reputable regulator that demands from licence holders high standards of adherence to financial regulation, including anti-money laundering and anti-financial crime. It is a worrying reality that, in the past few years, the MFSA was not always seen to be sufficiently determined to challenge abuse by a few rogue operators who used Malta’s attractive financial services legislation to conduct unethical business.

Some operators argue that another issue the MFSA needs to address with urgency is that of the conflict of interest that exists between its role as regulator of financial services and as promoter of the industry on the international scene.

Regulation and business promotion do not sit comfortably in the same organisation. The MFSA should concentrate on the sanctioning of financial services activities as well as the updating and enforcement of regulation to make it relevant to the fast-changing finance industry. Finance Malta could successfully take on the business promotion role for the finance sector.

The financial services industry has grown substantially during the past two decades. This growth has undoubtedly caused severe strains on the resources of the MFSA. Malta’s competitive advantage in financial services is often acknowledged as being the ability of operators to get fast feedback from the regulator, thereby enabling the industry to react in time when circumstances change.

In his role of non-executive chairman, Prof. Mamo will not be expected to be responsible for restructuring the organisation to make it more responsive to operators’ demands. But, together with the board of directors, he will need to ensure that the CEO and the senior executive team are given clear direction on the strategic objectives of the MFSA. The board must also hold accountable the executive team for the implementation of strategies aimed at making the regulator responsive to the reasonable requirements of financial services operators.

Growth at all costs is hardly a good strategy for any industry and the more so for financial services. Malta’s economy is already heavily dependent on this sector. Now is the right time to concentrate more on weeding out less than ideal operators and focus on quality rather than quantity of operators.

Like most local operators, Prof. Mamo is aware that Malta’s tax regime is under scrutiny from international organisations because, rightly or wrongly, some perceive the island as a less than reputable financial services centre.

Recent cases reported in the international media and relating to the alleged abuse of the local banking system to facilitate tax evasion, financial fraud and money laundering are damaging Malta’s reputation. The MFSA needs to be seen as being strict with those who abuse their licence to operate here.

Industry operators should welcome the appointment of Prof. Mamo, who enjoys the trust of both major political parties.

This is a Times of Malta print editorial

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