Memoranda of Understanding are always important in order to maintain relations between countries. Unfortunately, many of these are not followed up and do not materialise in any concrete business. Indeed, very often during state visits we hear of agreements between chambers and other organisations. The reality is that no one reports what are or could be the tangible benefits or results of same, if any.
In the context of this agreement we can anticipate what it can result into if followed up properly. ADGM has three independent authorities – the Registration Authority, the Financial Services an international scenario, Regulatory Authority (FSRA) and ADGM. Although they have a strong vision vis-à-vis the international scenario, they are a relatively new institution. The collaboration with Malta may assist them in gaining more international exposure. On the other hand, Maltese practitioners if acquainted with the system may find that collaborating with these countries may assist in facilitating or mitigating the challenges provided by over regulated countries.
The collaboration between the two countries at the face of it is a very positive one. However, how come an Authority does not sign a memorandum of understanding with another authority but signs with a promotional foundation? A number of different reasons come to mind:
- The meltdown in the local financial services industry is becoming all the more evident and Malta’s purported coordination, has fragmented totally. In this context, Finance Malta would have gone its own way and the MFSA another.
- The MFSA may have once again snubbed this region, possibly feeling superior to anything to do with the region. Perhaps this is related also to the way MFSA has dealt with Islamic finance.
- The ministers present prefer to deal with business oriented finance Malta than with MFSA who is miserably failing on various fronts. Rather than taking the necessary measures to address these issues, is Government isolating the MFSA or totally ignoring it?
Whatever the reason, it certainly does not look positive that the MFSA is totally inactive in the areas where the financial services industry could see a possible growth. It is particularly worrying that in a period where there is an unprecedented slowdown in our financial services industry due to various reasons including the inaction of the same MFSA, this same authority seem to be more concentrated on lobbying for a further term of the same board of governors.