The regulator’s Strategic Plan 2019/21, published on 6 September, outlines its intention to implement a revenue model “based on the risk profile/assessment of each sector” it supervises.
Details were scant, but the regulator stated it will carry out a consultation with licence holders and “relevant stakeholders” to “discuss potential revisions to our fee structures, as we strive to reduce our dependency on government financing”.
“The MFSA is expected by international standards to be operationally independent,” said Joseph Cuschieri, chief executive of the MFSA.
“As a result, we are currently considering revisions to our fee structures to reduce our dependency on government funding and, in the long run, become financially self-sustainable.”
If the business plan goes ahead, the MFSA expects to become fully financially independent by 2024, “in line with the financing model adopted in other European jurisdictions”.
Currently, the Maltese watchdog charges authorisaton and supervisory fees, but many other services are offered for free.
One potential outcome from the consultation could see the MFSA mimic the levy-based revenue model of the UK’s Financial Services Compensation Scheme, which charges companies an annual fee based on their respective market segment.
It could see some firms forking out significantly larger sums while others see little change.
International Adviser reached out to the regulator for more information but did not receive a comment in time for publication.
Introducing a different fee model would not only means greater perceived independence for the financial watchdog, it would also provide a cash injection to enable it to keep up with local and global changes.
Areas that stand to benefit from additional investment include technology, expertise and human resources, it said.
As a result, the MFSA has pledged €12m (£10.7m, $13.2m) for technological innovation over the next three years.
London is calling
In a recent interview with International Adviser, Cuschieri revealed he intends to imitate the way the UK’s Financial Conduct Authority (FCA) operates.
“The [FCA] has a very good practice, which I want to replicate, they publish a supervisory programme and what they want to do.
“[It] spells out [regulatory expectations] immediately, and we need to do that. I personally believe in the self-regulatory approach, which is the British approach.
“The British system is a culture of compliance, which is a traditional regime. They tell firms ‘this is what needs to be done, come back when you have done it’.
“The European approach is more ‘you need to do this; we will watch you do this, and we will breathe down your neck until we do this’.”
Technology and funding models, however, are not the only issues the MFSA is looking to tackle.
The business plan also sets out to fortify the MFSA’s supervision of governance, culture and conduct within the island’s financial services industry; as well as a commitment to combat money laundering and financial terrorism.
Commenting on the strategic plan, Cuschieri said it “is focused on strengthening the MFSA and preparing it for the next generation of financial services”.
“This roadmap defines the specific programmes and actions we will be taking to achieve this objective, with substantial investment in our human resources, capacity building and investment in cutting-edge technologies.
“This reflects our commitment to provide a more agile, safe, dynamic and efficient environment to the benefit of consumers and regulated firms.”