The MFSA has rolled out its Strategic Plan, a roadmap for strengthening its governance and supervisory role, paving the way for the next generation of financial services.

The Strategic Plan covers the period 2019-2021 and outlines the MFSA’s strategy when it comes to supervision and innovation. The Plan will be concretely implementing the regulator’s strategic objectives by focusing on a number of cross-sectoral and sector-specific objectives.

Clear objectives for the road ahead

The Authority has set four key strategic objectives for the period in question:

• Safeguarding consumers’ interest and increasing market confidence;
• Harmonising its regulatory and risk-based supervisory approach;
• Establishing Malta as an international FinTech hub;
• Investing extensively in technology while enhancing its organisational and operational capacity.

The sector-specific priorities outlined in the Plan take into consideration the wide array of entities regulated by the MFSA.  Their focus includes enhancing banking supervision, safeguarding the financial stability of the insurance and pensions sector, monitoring Brexit’s implications and focusing on the proper governance and cyber-attacks resilience of firms in the market.

Moreover, the Plan lays out the regulator’s cross-sector priorities, covering a wide range of initiatives. From the governance perspective, the MFSA will be focusing on measures planned to enhance its governance and risk management framework, including an organisational structure overhaul which recently involved the creation of special committees – such as one focusing on AML/CFT – and functions – such as the one specialising on Data Management and Business Intelligence. Cybersecurity and resilience is another cross-sectoral component, with the regulator planning, amongst other measures,  to ensure that supervised firms have a cybersecurity infrastructure in place and a person responsible for managing it. Firms are also expected to train staff and conduct in-depth threat analyses.  A key cross-sectoral goal is fighting financial crime, where the Authority is seeking to enhance collaboration with the Financial Intelligence Analysis Unit. Here, the MFSA’s strategic priorities involve focusing on the entire lifecycle of authorisation, supervision and enforcement, while adopting a structured risk-based approach.

The MFSA has a key role in maintaining Malta’s financial stability and sustainability. As part of its Strategic Plan, a dedicated Financial Stability function has been established, providing it with a team specialising in market oversight and macroprudential activity. Another aspect of the Plan is technology and innovation, with the Authority’s FinTech strategy, together with its substantial investment in new technology, underpinning its objectives in this sector. On the FinTech side, it will soon be launching a regulatory sandbox, providing entities with a space to operate in a controlled but fully-functional financial services environment.

Apart from the FinTech strategy, the MFSA has also outlined its Technology strategy for the period 2019-2021, which will see the regulator embracing new technologies and enhancing its digital presence through the deployment of reliable systems and services. Another key cross-sectoral priority is the boosting of the Authority’s organisational and operational capacity, which requires increasing the available human resources by addressing skill-gaps in the labour market. The MFSA will moreover be working to increase its public value by ensuring that consumer interests are protected. To do this, it will step-up its supervision of regulated firms’ business conduct, mainly through the setting up of a regulatory framework which ensures appropriate consumer protection.

International institutions’ recommendations taken on board

In drawing up the Strategic Plan, the financial services regulator carried out a broad consultation exercise, involving a number of stakeholders, including international experts. Feedback from licence-holders, through an extensive market survey carried out last March, was also taken on board. The MFSA also considered recommendations made by international institutions and standard setters, such as the European Banking Authority, International Monetary Fund, the European Central Bank, the European Commission and Moneyval.

The Plan was developed within the context of a local and international financial market which is facing challenges, such as those related to labour supply and new emerging risks emanating from increased financial innovation and technology.

It also gave due consideration to regulatory developments at an international level, and to both local and global instances of misconduct which may have negatively affected trust in the financial services sector, worldwide.

Five-year business plan leading to financial independence

Meanwhile the MFSA is also developing a five-year Business Plan, which will see it reform its financing model, ensuring long-term sustainability and equipping it with enough resources to carry out its mandate. The Business Plan will also include a revision of MFSA fees and will also include the introduction of new ancillary fees to cover expenses currently being provided at no cost, as well as revised authorisation and supervisory fees. The Business Plan should lead the regulator to becoming self-funded by 2024, in line with the financing model of other European jurisdictions.

Download your copy of the Strategic Plan here.