A tribunal has overturned a fine the financial regulator slapped on an investment firm for submitting its accounts late due to “administrative difficulties” caused by the COVID-19 pandemic.

Curmi & Partners were fined €5,000 last year for filing their audited accounts and other statutory returns with the MFSA three weeks after the April 2020 deadline.

In an appeal before the tribunal, concluded this summer, the firm argued that the regulator had itself acknowledged the challenges posed by COVID-19 in a public notice it published in March 2020.

The circular notified investment firms and other licensed entities that it would apply “flexibility” in the submission of regulatory filings due over the next few months.

Curmi & Partners argued the MFSA had reversed on its own commitment to apply a degree of flexibility when it came to their regulatory submissions.

The onset of the pandemic, it continued, was a time of great uncertainty, with the company and other industry players turning their focus on ensuring continuity in their operations.

It accused the MFSA of acting “in the most arbitrary manner and in clear abuse of its discretion” by imposing the fine, given the circumstances and the fact that the audited accounts were submitted soon after the original deadline. 

The main point of contention by the MFSA was Curmi & Partner’s failure to formally apply for an extension to its mandatory account filing period.

The regulator denied acting in a “manifestly unfair manner”, saying Curmi & Partner’s submissions to the tribunal in that regard were not only unfounded but frivolous and vexatious.

It was clear the delay in submitting the documents was a result of unforeseen circumstances brought on by the pandemic, rather than due to any negligence by Curmi & Partners- Tribunal

It argued that the March 2020 circular clearly stated that investment firms could be granted an extension following an official request, which would be examined on a case-by-case basis.

The MFSA said Curmi & Partners failed to submit such a request, therefore did not qualify for the extension.

In handing down judgment, the tribunal acknowledged Curmi & Partners’ failure to apply for the extension.

However, the tribunal said the “exceptional” circumstances of March 2020 brought about huge changes in people’s lives and the way businesses operated.

The tribunal said Curmi & Partners had ended up being fined more due to their failure to request an extension rather than a failure to submit the necessary documents, which were passed on to the regulator three weeks after the original deadline.

It said it was clear the delay in submitting the documents was a result of unforeseen circumstances brought on by the pandemic, rather than due to any negligence by Curmi & Partners.

The tribunal noted how the MFSA had not fined a number of other firms that had submitted documents late due to delays in the auditing process beyond their control due to the pandemic.

In overturning the fine, the tribunal concluded that the “concession” the MFSA offered the sector in March 2020 should not be lost because of Curmi & Partners’ failure to formally notify the authority that it needed an extension.

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