The Proposed Settlement Procedure under the MFSA Act

The Malta Financial Services Authority Act (the “MFSA Act”) presently endows the Malta Financial Services Authority (the “MFSA” or the “Authority”) with the discretionary power to investigate alleged infringements of financial services laws and regulations governing licence holders and persons authorised by it or falling within the Authority’s remit.

The MFSA strives to resolve investigations as promptly as possible to ensure productivity. To this effect, a consultation process with respect to the proposed introduction of a new legislative provision which shall extend the Authority’s power to enter into settlement discussions and agreements with persons or entities under investigation is currently under way. A Settlement Policy shall also eventually be in place to provide guidance on the approach to be adopted by the MFSA when entering into settlement agreements.

Therefore, the rationale behind this proposed introduction to the MFSA Act is to adopt an efficient settlement procedure, which safeguards the general interests and legitimate expectations of consumers of the financial services.

It is pertinent to note that a settlement agreement can only be resorted to should both parties, that is the MFSA and the person or entity in breach of its obligations mutually agree on the terms of settlement. Additionally, should the latter party fail to adhere to the terms of settlement, the Authority is further empowered to take any measure and/ or issue any order in writing it may deem fit, including inter alia the imposition of an administrative penalty.

Moreover, the proposed legislative provision to the MFSA Act shall be without prejudice to any other powers that are vested in the MFSA under the applicable legislative framework.

Further information and resources on this subject can be accessed from the herein linked circular published by the MFSA.