Professional advisors beware: The MFSA Act has been amended again

The Malta Financial Services Authority (Amendment) Act, Act no. XV of 2026, was rather hastily passed just before Parliament in view of the general elections. Bill no 168 was rushed through Parliament with less than a month lapsing between its second and third readings and received the necessary Presidential assent as late as 28 April 2026.

Some of these latest amendments deserve to be noted and examined because they were practically unannounced and unexplained.

David Fabri

They are quite long covering seventy-five pages in the English version alone. There appears to have been no public discussion, media interest was nil, and no meaningful consultation was launched. Certainly no explanations have been given as to why such significant changes have once again been affected to the MFSA Act (Chapter 330 of the Laws of Malta originally enacted in 1988).

Unfortunately, no consolidated version of the Act as amended is yet available, either on the government website or on the MFSA website. The latter is silent on the matter and provides no explanation or justification. So much for its much trumpeted transparency, which is indeed regularly only selective and self-serving.

This is probably the fourth or fifth time in its history that this public authority has indulged in re-naming and re-constituting its internal decision structures and organs. It seems engaged in endless experimentation and obsessing with itself, typical of ivory tower organizations.

The law is clearly a law written by the MFSA mainly to reflect and safeguard its interests and concerns. Article 16 has been amended to further add to the considerable powers already in place.

A few points that warrant attention:

A disturbing theme and clear objective running through the provisions of this new law is the enhanced powers and increased status and authority being assumed by the Chief Executive Officer. The new article 7D is startling. The CEO as re-defined by assuming more and more powers within the Authority’s decision making structures like never before. In my view, these provisions seem to cross a very serious line, moving away from the benefits of collective decision-making towards an unhealthy concentration.

Indeed, a fundamental value that characterized the original Act of 1988, even as subsequently amended, as in 1994 and 2002, was that all decisions were to be taken collegially. Decisions were the result of a collective effort following debate and were not to be taken by one person. Neither the chairman of the Board nor the Chief Executive Officer ever had special rights or powers that he could exercise by himself.

Unfortunately this has now changed. The CEO is now being specifically assigned way too many new powers and is now authorised to decide various matters by himself, rather than collegially. This is wrong and ill-advised.

Significant changes have been made to the competence of the Financial Services Tribunal and henceforth an appeal to the Tribunal may be grounded on any point of fact or law. Decisions are to be taken within twelve months. In the meantime, a new Executive Director of the Registry has been created. 

Professional advisors, a notion which remains undefined, but which presumably includes lawyers, accountants and auditors, would be well advised to move cautiously in the future. Their duty of professional secrecy is now set aside should they come across any fact about their client (a licence-holder or applicant) which might negatively influence (“might have a bearing on”) the Authority’s due diligence in his regard.

This can be seen as another attempt by the MFSA to reduce its own risks by placing fresh burdens and additional obligations on licence - holders and their advisors.

At the time of writing, neither the Justice Laws website nor the MFSA’s own website make available a full updated copy of the Act as amended. The MFSA website, though voluminous, offers no information or explanations. Needless to say, the website is devoid of any self-criticism and shows a rather too self-satisfied entity.

The MFSA engages in constant friendly conferencing and spends much public money in pre-scripted PR. Evidently, the Authority likes people who speak highly and positively about it.

Fines shall henceforth be passed to the Consolidated Fund rather than into the regulator’s own pockets. This is an issue I have regularly highlighted pointing out that imposing fines to benefit one’s own finances is blatantly self-serving and wrong.

Once again the MFSA obsesses with secrecy and re-affirms its regrettable and unacceptable position not to name wrong doers who have been punished through administrative fines. This opens the door to discriminatory treatment, to selective publication and preferential treatment. The Authority once again expresses its disdain to naming and shaming and to complete transparency.

David Fabri LL.D., Ph.D. has written and lectured extensively about financial services regulation, company law and consumer protection since 1994. He has recently authored a Trilogy of books covering these subjects.