Malta's Conduct Supervisory Unit flexes its muscles

Chris Hamblin

8 September 2016

On the first day of this month the Conduct Supervisory Unit became responsible for the supervision of investment firms' conduct in the following areas: client disclosures and reporting (including investment advertisements); conflicts of interest and inducements; selling processes and practices; contractual agreements with retail clients; the execution of clients' orders; and the governance of regulated persons – primarily to ensure that customers are treated fairly.

The laws on which the unit relies upon are the Investment Services Act 1994 and the Investment Services Rules for Investment Services Providers. This might change if Government proposals for a conduct-of-business rulebook bear fruit. The unit (which is also responsible for the supervision of trustees, fiduciaries and company service providers) is still drafting the rulebook with the aim of giving effect to various European Union directives and regulations including the upcoming Markets in Financial Instruments Directive, its concomitant regulation (MiFIR) and Insurance Mediation Directive 1.5. It is bargaining and negotiating with the central EU regulators (such as the European Securities and Markets Authority) as part of the process.

The Conduct Supervisory Unit consists of multidisciplinary teams that supervise the conduct of investment service licence holders, insurance undertakings and others and it is still recruiting staff. The MFSA is looking for applicants with a background in law, accountancy or banking/finance. To be successful, each applicant must have an honours degree from the University of Malta or an equivalent qualification in accountancy or banking and finance or law (LL.D) or in another finance-related subject or a comparable qualification in a financial subject at NQF (National Qualifications Framework - actually a far-from-national system of grading involving 47 countries) level 6 at least. It is the responsibility of every applicant who possesses a qualification from outside Malta to show the regulator a "recognition statement on comparability of qualifications" from the Malta Qualifications Recognition Information Centre. Work experience in the financial service sector and a sound knowledge of the conduct-of-business obligations of investment service licence holders are desirable. The lucky winners will form part of the unit’s investment firms supervision team and their duties will include:

participation in on-site visits;
helping others to assess the business operations and strategy of investment services licence holders in a systematic way to ensure that the interests of consumers lie at the heart of the way those businesses are run;
participation in thematic reviews of the way firms conduct their business, involving desk-top reviews and on-site visits;
close liaison with the Unit’s risk assessment team whose job it is to analyse emerging risks and trends;
the analysis of data and intelligence received from that risk assessment team with the aim of setting the unit's priorities; and
the management and development of direct reports.