A creditor’s obligation to assess the creditworthiness of a consumer
by Ganado Advocates
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by Ganado Advocates
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In the first episode of the ‘Ganado Meets Finance’ podcast, Ganado Advocates’ Managing Partner Andre Zerafa speaks with MFSA CEO Joseph Gavin about regulation, supervision and the future of the industry.
Listen to the Podcast here:
4.1 Ganado Meets Finance with Joseph Gavin – Ganado Meets | Podcast on Spotify
The experience for Joseph Gavin as the MFSA’s CEO has been a fascinating and busy journey so far. He does, however, believe that notwithstanding the finance industry being dampened for a while by the pandemic and Malta’s greylisting by FATF, admirable progress has since been made and we now seem to be in a clear path which has given rise to a much greater sense of confidence among practitioners, regulators and the industry in general.
The financial services sector remains diverse and there is a very strong base for the continued growth of the sector.
Going forward, Gavin says that the MFSA needs to be seen as an effective regulator, gatekeeper, supervisor and enforcer which is committed to supporting the industry, particularly in terms of identifying growth opportunities as well as niche growth opportunities.
The MFSA has recently carried out an internal assessment to identify aspects which need to be enhanced to further engage with the sector. The MFSA continues to strive to improve efficiencies and processes, and also assisting in changing the framework to allow for wider growth opportunities.
Forward looking: On a global level, technology is advancing swiftly and overtaking steadily. In the eyes of Gavin, this will be one of the MFSA’s biggest challenges in the coming years. Both short-term and long-term changes will need to be undertaken to ensure that Malta’s platforms are and remain operative and effective. Considering, Gavin deems there to be great prospects for our payment and e-money institutions.
Innovation: When it comes to innovation, the MFSA wishes to place itself in a more competitive position when compared to the larger jurisdictions, which may be done by making processes more efficient, expanding the capacity of Malta’s legal and financial instruments, and by developing and allowing for new products, such as a notified PIF (product information file).
Competition: There are various areas of the financial services sector which are indeed competitive but there is still the need for more proportionality. This will accommodate competitiveness within the EU and allow smaller jurisdiction, like Malta, to compete effectively with other larger jurisdictions.
Where the opportunity arises, Malta should negotiate revisions to the EU framework and put forward the proportionality argument.
MFSA’s supervisory priorities for the next few years
The MFSA has a very comprehensive strategy in terms of supervisory priorities. For instance, in the banking sector, the MFSA’s priority will be to continue to supervise closely while working towards consolidation.
The insurance sector, on the other hand, is a well-established sector and is very well covered by insurance legislation and has a good variety of innovative structures (such as the protected cell company legislation). Interestingly to note, the insurance sector has sustained itself very well throughout the pandemic.
As regards payment institutions, that there has been a significant growth in the sector both in terms of volume of payments and activity passing through the various regulated firms.
The MFSA continues to be supportive of innovation. There is an opportunity for firms to develop technology and change the way of doing business, which the MFSA encourages, using the sandbox.
While noting that there is also great potential for the asset management sector in Malta, Gavin says that a number of things need to be improved, including (i) our legislative framework; (ii) our engagement with the industry; and (iii) the arrival of international depositaries.
The arrival of the international depositary, or the opening up of the restriction which exists at the level of the AIFMD (requiring a local depositary for the Alternative Investment Fund (the AIF)) would be very welcome by the industry.
The blockchain island
The regime Malta has for virtual financial assets is probably one of the best in the world. Presently, the island has around 15 operators and 15 virtual financial assets agents. Although the industry isn’t the largest, Ganado Advocates’s managing partner Andre Zerafa deems it strong enough for Malta to be able to build on what there is, and this needs to be done particularly in response to the needs of the investors, who deem exposure to crypto assets to be extremely important.
Conclusion
It is clear that Malta and the MFSA are open for business, which needs to continue to be compliant with the expectations both at EU level and even at a national level. From 2008-2016, Malta has had exponential growth and while the country has seen some consolidation in the past two years in particular, it is now ready for the next challenge.
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