MFSA Consultation – The TEN cardinal failures of Chairman Bannister and Director General Scicluna and two recommendations for Parliamentary Secretary Silvio Schembri

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Over the last weeks received various feedback to the Government’s Consultation Document on the MFSA. It is interesting that various industry practitioners and other professionals were coming up with the same concerns.

It is a common feeling that the consultation document was nothing but a self-glorifying document aimed at hiding the failures of the same Authority. selected the most common concerns which it relabeled “The 10 Cardinal Failures of Chairman Joseph V Bannister and Director General Marianne Scicluna:”

Failure One – Clear Vision

Failure to have a clear vision for the MFSA’s future. The organization is in disarray with no one really knowing what the future will look like. In the meantime, the Chairman and the Director General are wheeling and dealing behind everyone’s back with extensive business travel going on.

Failure Two – Transparency

Failure to be fully transparent with the MFSA staff, the industry and the general public. The Authority has a culture of Omerta normally associated with brotherhood organisations. Perhaps, after all Minister Bartolo was right in linking the Authority with The God Father. Activities at MFSA are carried out behind closed doors in one office. The Chairman has meetings with practitioners and consultants, on high level MFSA related issues unaccompanied and without keeping a note for record. The Director General is over excited about the MFSA’s tattlers while feeding the same by failing to be fully transparent with employees about the true situation of the MFSA and the future of the organization.

Failure Three – Business Process Reengineering

The business process reengineering exercise of the MFSA is the millennium joke within the industry. The expression of interest for consultancy services for a business process reengineering at the MFSA was published by the Authority 21 months ago – December 2015. While the world of finance is as dynamic as ever, the MFSA continues to drag its feet with regard to the implementation of what is necessary. In the meantime, the Chairman and the Director General continue to enjoy trips abroad instead of getting on with what needs to be done! Estonia!?

Failure Four – Authorisation Process

The authorization process is as failing as ever. Are you in the good books of the Godfather? Then it’s simple, otherwise it’s the most inefficient system in the world. The Director General had publicly committed to put in place a more efficient authorisation procedure and yet the significant delays in the authorisation processes continue to persist with Malta losing important business due to the unnecessary delays and mistakes of the same Authority.

Failure Five – Supervision and Enforcement

The MFSA has failed to implement robust supervisory processes that may identify and prevent failure and efficient enforcement procedures which act as a proper deterrent for wrong doers. The country experienced various situations in this regards with licences being given to the wrong people and not followed up appropriately or conveniently. MFSA never clarified re Nemea Bank and Pilatus Bank just to mention two popular scenarios.

Failure Six – Business Continuity

Another joke! The MFSA failed to a proper business continuity plan and disaster recovery procedure. The Authority was incredibly arrogant in its replies to Parliamentary Questions. We would dare say that in certain replies it may have lied as such procedures no employee is aware of.

Failure Seven – Data Management System

In 2017 the MFSA does not have a proper electronic data management system for the digital storage and management of information about operators and licence holders. Indeed, MFSA has a disorganized system and on many occasions, is not able to collate the appropriate intelligence on certain persons or more worrying is that it may have lost certain information or has the wrong information.

Failure Eight – Mission

MFSA has failed to understand its Mission, to communicate this clearly to MFSA staff and the general public and to implement this properly. Marketing of financial services creates a conflict of interest and should not be part of a regulator’s mission. This was understood years ago by many as Finance Malta was created but it seems the regulator did not understand this. It is of concern that today, after 15 years from the MFSA’s establishment, the Authority’s Chairman and Director General are still unsure about and are paying consultants to identify the MFSA’s mission!  Seriously?? Do you need a consultant to identify what should come naturally from its foundations??

Failure Nine – Crowdfunding and Sharia Finance


The MFSA has failed to implement proper legislation to allow for the provision of crowdfunding services, when this type of activity has been available in other jurisdictions for at least the last five years. It has fictitiously issued papers regarding Shariah Finance and is blamed by many players in the industry of being guilty of putting up barriers to the development of sharia finance in Malta for the past eleven years. This in spite of what was being done in London, Luxembourg, Ireland, Italy and Germany. What was it? A small regulator is approachable and fast and efficient in implementing…. What Italy moved faster??

Failure Number Ten – FinTech

Proactive? – What does it mean?

The MFSA has failed to be proactive and well prepared for the advancement of FinTech. While other Authorities including those in Ireland, Luxembourg, Netherlands and UK have established innovation hubs to support the development of FinTech, MFSA remains silent and ill prepared to take on this challenge.

Interestingly also MFSA now has engaged in contradicting Government. Government was happy regarding Bitcoin and the importance Malta was taking in this development. The MFSA decided that it needs to contradict Government and tell him that he is promoting the wrong thing.

MFSA now wants to dictate the Governments agenda!?

Recommendations for PS Silvio Schembri

Recommendation One – Beware

 Beware of scheming mechanisms planned behind your back to pave the way for another extension of the Emperor’s term. It is not true that there are no valid persons to take the role that the Prime Minister told us would be vacated by end of year. There are a lot of experienced resources. Have a good look around you.

Recommendation Two – Fire Bannister and Scicluna and Appoint a new Chairman and DG

There has been talk that the Government wants to appoint a CEO to take control of the situation while leaving Bannister at the helm together with Scicluna as DG. There has also been talk of a complete restructuring of the MFSA.

Having had feedback from industry practitioners and experts in the field of governance, this news portal is of the view that no major reform is required. Since in the management of an organisation the tone is set at the top, the solution is quite simple:

Fire Bannister and Scicluna (Director General) immediately and appoint a new Chairman and DG, who should be given a clear mandate to reform the MFSA.

The qualities for the new appointees for Chairman and DG are also very simple:

The new appointees should have the experience in management, the technical ability in financial services and the stamina to reform the MFSA. Moreover, they need to be pro Good Governance and Transparency, something lacking today in what is supposed to be a reputable regulator…LOL 

There are various candidates that could easily fill the role. The quicker this change is made, the better for the future of financial services and its regulation in Malta.