MFSA drops target of ending reliance on state funding

The Malta Financial Services Authority (MFSA) has dropped its pledge to wean itself off government funding, the regulator confirmed after missing the deadline it set itself to become financially independent by 2024. 

In a business plan published in September 2019, the MFSA committed to becoming “financially independent from the government by 2024” and, in the long run, “fully self-funded” through the fees it charges. 

Then-CEO Joe Cuschieri had argued that the financial services watchdog was “expected by international standards to be operationally independent”. Cuschieri had been handpicked for the CEO role by the prime minister's office in 2018 and initially retained positions on other government entities 

Asked by Times of Malta whether that target had been met, the MFSA confirmed it had been shelved. 

“The earlier 100% self-funding target was reviewed and the authority moved towards a mixed funding model,” a spokesperson said. Such approach, the spokesperson added, is intended to support adequate resourcing, long-term sustainability and the continued competitiveness of Malta as a financial services jurisdiction. 

There is no common standard for how a financial regulator should be funded. In the UK, the regulator is funded entirely by fees from the firms it regulates but Ireland uses a mixed funding model, although it is trying to reduce the burden of subvention. 

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The MFSA's accounts show it came within reach of the goal before sliding backwards. The government subvention – the annual top-up the regulator receives from public funds – fell every year from €24.8 million in 2019 to €14.3 million in 2022, by which point the MFSA's own income exceeded the subsidy for the first time. 

The trend then reversed. The subvention climbed back to €18.1 million in 2023, stood at €17.7 million in 2024 and reached €20.8 million in 2025. 

Costs have risen steeply: operating expenses reached €48.9 million in 2025, up from €27.1 million in 2022, as it absorbed new EU regimes including the Markets in Crypto-Assets Regulation and the Digital Operational Resilience Act. 

The spokesperson said the authority's responsibilities “have increased significantly over the past decade, in line with the growth and increasing complexity of the sector”. 

Its own income has also grown sharply, jumping to €25.6 million in 2025, following a reform of fees that had “remained largely unchanged since 2014”, according to the authority. The regulator posted a €1.3 million deficit for the year, down from €4.6 million in 2024. 

The MFSA's 2025 accounts also disclose a funding arrangement: “a system of pre-approval of the annual subvention as approved by the House of Representatives” based on annual and five-year forecasts of revenue and expenditure. 

Asked how this arrangement supports the regulator's stated core value of independence, the spokesperson said any subvention “is approved through the established budgetary process and does not affect the MFSA's operational independence, decision-making, authorisations, supervision or enforcement actions”. 

“The MFSA remains accountable and transparent, while retaining full independence in the discharge of its statutory functions,” the spokesperson said. 

Turbulence 

The self-funding pledge dates to a fraught period for the regulator. In 2018, the MFSA swung to a €7.9 million loss after the Registry of Companies – which provided around €9 million in annual revenue – was carved out of the authority, while its costs rose 37%.  

The reserve fund stood at €12.9 million at the end of 2025, down from €14.3 million a year earlier, as deficits continue to be absorbed from reserves. No surplus funds were paid to the government in 2024 or 2025. 

A commercial law academic contacted by Times of Malta said it would be ideal for a financial regulator to be financially self-sufficient to avoid having to beg for money and to allow it to set out its own plans and projects without interference or influence. 

“But regulatory independence is not simply the product of financial self-sufficiency, though that helps. It also requires competent and brave regulators who resist influence under any circumstances,” he said, speaking anonymously. 

He also pointed out that a bad regulator could still be financially independent and an agency could operate efficiently and correctly without being financially independent. “One has to take a case-by-case basis here.”