Earlier this month, the Malta Financial Services Authority published its Annual Report and Financial Statements for 2019. The Report provides an overview of the progress being made by the Authority as it embarked on its transformational journey to strengthen its regulatory oversight and raise compliance standards across the entire jurisdiction. In light of this, and as we near the end of the first half of 2020, it is opportune to outline the Authority’s outlook and plans for the rest of the year.
While acknowledging that the challenges created by COVID-19 may impact our attention on other long-term priorities, the Authority remains committed to the key reforms outlined in its three-year Strategic Plan earmarked for the rest of 2020.The MFSA has set itself the highest standards of governance, risk management, culture, and conduct. In 2020 it embarked on a corporate governance reform which will lead to a comprehensive and enforceable framework. Following a consultation in 2019, the MFSA is also working on the introduction of an Independent Compliance Audit Framework which will strengthen its supervisory approach and ensure proper, effective supervision. Furthermore, the publication of a Capital Markets Strategy is set to take Malta’s Capital Markets to the next level whilst the Asset Management Strategy will strengthen Malta’s position as an Asset Management jurisdiction.
During 2019, the Authority intensified its investment in developing a risk-based model to be used in managing its supervisory efforts. The MFSA is currently working on the second phase of this model, involving entity risk analysis. The Authority’s risk-based approach aims to minimise the occurrence of breaches to protect consumers whilst maintaining the integrity and stability of the financial services market. A significant increase in the number and thoroughness of compliance visits was also reported for 2019. The Authority’s focus on onsite inspections is also set to increase in 2020.
The MFSA has set up a new ICT Risk and Cybersecurity function within its Supervision Directorate, which is now embedded as one of the top strategic priorities. The Authority is also planning to publish detailed ICT Risk and Cybersecurity guidelines, in line with evolving guidance provided by the European Supervisory Authorities (ESAs) and internal best practices in this field. Building on the investment in technology made in 2019, and the setting up of a Data Management and Business Intelligence function, the Authority will continue working on projects leading to the complete digitisation and digitalisation of its business processes.
In the innovation space, the Strategy, Policy & Innovation function, which was set up in 2019, will soon be receiving applications from eligible FinTech firms to utilise the MFSA FinTech Regulatory Sandbox to test their innovation/s for a specified period, under certain prescribed conditions.
The MFSA will continue ensuring that it has sufficient resources and expertise in place to effectively supervise each respective sector and adopt a knowledge-driven supervisory model. The setting up of the Financial Supervisors Academy will further support the MFSA’s efforts to invest in upskilling and human resources development.
Looking ahead, the results being achieved in relation to the Authority’s strategic priorities, whilst maintaining the confidence in the integrity of our financial markets, will enable it to perform its critical roles of providing a harmonised and effective regulatory approach, preventing misconduct and ensuring the continued and sustainable growth of the financial services sector.