MFSA Publishes New Publication Policy, Alongside Feedback Statement
On the 1st of December 2022, the MFSA published a Consultation Document on the New Publication Policy regarding Administrative Measures and Penalties thereby commencing a consultation period which closed on the 15th of January 2023. A subsequent Feedback Document containing the new Publication Policy was issued on the 16th of June 2023 (hereinafter referred to as the ‘Publication Policy’), following feedback received from the market. The Policy is applicable as of the 1st of June 2023 to all administrative measures imposed by the MFSA.
By way of background, the Malta Financial Services Act (hereinafter referred to as the ‘MFSA Act’) empowers the MFSA to impose administrative or disciplinary sanctions or measures on license holders or persons authorized by the MFSA (hereinafter referred to as ‘Investigated Person/s’), after investigations of alleged breaches of financial services laws and regulations have been carried out. In this respect, article 16(8) of the MFSA Act expressly provides that the MFSA is obliged to publish the administrative measure imposed on the investigated person/s.
The main aim of this new Publication Policy is to establish principles for the MFSA to adopt when publishing the measure imposed on the Investigated Person/s, whilst complying with the underlying principle that, not only should the measures act as a deterrent to other license holders but also that the public should always be kept informed about whether their service provider is subject to penalties.
The following were categorised as policy principles by the MFSA within the Publication Policy:
- The Medium used for publishing of the administrative measures;
- The Manner for publishing the imposed administrative measures;
- The Anonymity Principle;
- The Duration of the Published administrative measure; and
- The Monitoring Programme.
The MFSA provided that in relation to Principle 1, the medium used is ordinarily the MFSA website, but that the MFSA now also holds the discretion to publish on other media platforms such as newspapers. The manner for publishing as laid down in Principle 2 is to include disclosures on the identity of the person (unless it falls under the third principle), together with a summary of the MFSA’s decision. Principle 3 is diametrically opposed to Principle 2 as it allows for the Investigated Person’s name to remain anonymous. The duration of the published measure mentioned in Principle 4 follows a criteria for different types of measures such that the harsher the administrative measure, the longer it will remain on the MFSA website. The monitoring programme referred to under Principle 5 will ensure that the information which is made available to the public is up to date and accurate.
Following the decision by the MFSA to impose an administrative measure in line with the Publication Policy, the Investigated Person is notified and subsequently, a statement is published to the public on the MFSA’s website and on other media such as newspapers at the discretion of the MFSA. During the consultation process, concerns were raised by the market that the statement made to the public should only be published once the prescriptive period to lodge an appeal has expired, or, if an appeal has been filed, once the appeal is decided by the Financial Services Tribunal in favour of the MFSA. In response to this, however, the MFSA stated that there is an ongoing obligation towards the public to be informed in order to avoid any damage being suffered.
The MFSA believes that Investigated Person/s who receive an administrative measure should be named in order for the public to be aware of their conduct in the financial services industry. The principle of anonymity is an exception to this rule.
The market raised concerns that anonymity would lead to ambiguity and lack of transparency. In this regard, the MFSA stated that a balance should be struck between its license holders/authorised individuals and public interest so as to avoid causing any disproportionate reputational damage.
In light of this, the MFSA has proposed that if one of the following two scenarios occurs, the public statement can be made on an anonymous basis. For the first scenario to apply, the administrative sanction imposed must be in relation to a non-material breach and the penalty must not exceed thirty thousand euro (€30,000). The Publication Policy includes an Annex which further specifies what constitutes a non-material breach. The second scenario would apply in the case where the publication would jeopardise the stability of the financial market or an ongoing investigation, or in the case where the publication would cause disproportionate damage to the person involved.
An annual assessment will be carried out so as to monitor and update all the published administrative measures.
Following the feedback received from the market, the MFSA finalised the Publication Policy, the final version of which was published on its website with an effective date of the 1st of June 2023.
Disclaimer: This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact [email protected]
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