Malta Conduct of Business Rulebook: MFSA Issue Consultation Document
The Malta Financial Services Authority (the “MFSA”) is currently in the process of setting up a Conduct Supervisory Unit. This is being done for the purposes of implementing the regulatory framework and securing adequate client protection in the industry through a supervisory regime aiming to address potential or emerging risks for clients in the financial services industry. The aim is also to strengthen the fair treatment of customers by regulated entities.
The regulatory requirements with respect to the treatment of clients will be the subject of a Conduct of Business Rulebook (the “Rulebook”) which is being drafted to this end, and regarding which the MFSA have issued a Consultation Paper.
The reasoning behind the consultation is for the MFSA to gain insight into the industry’s views on:
The first three draft Chapters in the Conduct of Business Rulebook which cover: (1) Client Disclosure Requirements, (2) Product Governance and Oversight and (3) Conflicts of Interest;
Specific areas such as the selling of complex products and the application of the Rulebook to structured deposits.
Other areas which will be covered in subsequent chapters are currently under review by the MFSA, and the consultation procedure will be replicated for such further chapters.
The intention of the MFSA is to have one comprehensive rulebook which will be initially addressed to:
Investment services providers (excluding custodians);
Insurance undertakings and intermediaries; and
Credit institutions under the Banking Act, who sell or advise clients in relation to structured deposits.
Other regulated entities will eventually be addressed by the Conduct Supervisory Unit in the future.
The following EU Directives are being transposed into the Rulebook, along with any relevant Level 2 measures:
Mediation Directive (IMD I) and the new IMD II;
UCITS IV and V.
Furthermore, the Technical Advice issued by ESMA regarding Level 2 Measures under MiFID II has also been incorporated along with the opinions and guidelines issued by ESMA, EIOPA and the EBA.
The feedback received from the industry following the original consultation of the 27th January 2014 of the MFSA regarding the “Proposed Conduct of Business Rules for the Enhanced Protection of Customers in Investment Services” was also taken into consideration.
The Way Forward
The deadline to submit feedback to the MFSA on the proposals put forward in the Consultation Paper is 13 June 2015, and the links can be accessed here.
As explained above, this consultation only refers to the first three chapters of the Rulebook. The MFSA will publish the final Rulebook when the remaining chapters have been issued for consultation from the industry.
A transitional period will be allowed to regulated persons to comply with the new Rulebook requirements once it is published.
AUTHOR: Dr. Carla Barthet
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.