According to Wikipedia, Regulatory capture is a form of government failure that occurs when a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of special interest groups which dominate the industry or sector it is in charge of regulating. When ‘regulatory capture’ occurs, the interests of firms or political groups are prioritised over the interests of the public, leading to a net loss to society as a whole. Government agencies suffering regulatory capture are called ‘captured agencies’.
It seems that MFSA DG is participating in the marketing of the jurisdiction as a financial centre. Her role is to regulate, supervise and enforce in the best interest of consumers of financial services. However, it seems that the said DG is participating in promotional events such as http://www.financemalta.org/events/event/annual-malta-funds-conference/
Sponsorships granted by the MFSA seem to indicate that the said Authority is too overly familiar with industry players. Is MFSA still carrying out marketing in spite of the formation of Finance Malta? Are these sponsorships directly approved or disapproved exclusively by the DG or by the Chairperson?
The document hereunder outlines details of sponsorships awarded by the MFSA over the years. This information was furnished by the Minister for Finance, Prof Edward Scicluna in reply to a Parliamentary Question by Hon Anthony Agius Decelis.
MFSA should declare its policies regarding awarding of sponsorships and the criteria with which these are granted. If MFSA has a budget for sponsorships, then this should be allocated to Finance Malta which was supposedly formed to promote the financial services of Malta. The authority should never be directly involved in these cash sponsorships…That is, if the perception of an ‘independent’ authority is to be reinforced – a perception which is fast being dispelled and which is reflecting badly on the whole financial services of Malta. If, as in the current scenario, it appears anything but independent and is perceived as being too close to industry players, then MFSA may be easily classified as a captured agency.