MFSA LAYS DOWN SUPERVISORY EXPECTATIONS FOR LICENSED ENTITIES
The MFSA has issued a publication entitled “Supervision: Risks Identified, Weaknesses and Expected Controls – A Cross-Sectoral Analysis” wherein it provided a study of the risks and weaknesses which it witnessed within the financial services industry in its supervisory role. It further highlights the expected controls to be implemented in order to keep such issues at bay. The first chapter of this publication generally tackles the risks (ranging from AML/CFT related risks to other exposures linked to corporate governance and conflicts of interests) as well as weaknesses and expected controls on a cross-sectoral basis. The next chapter delves into sector-specific risks present in various financial industries, particularly effecting insurance and pensions, credit and financial institutions, entities within the realm of securities and markets, and trusts and corporate service providers.
EU BOOSTS CONSUMER PROTECTION THROUGH THE ADOPTION OF NEW DIRECTIVE
Consumer protection was at the centre of discussions within EU, wherein the Council adopted a new Directive to better safeguard consumer rights. The new directive amends four directives, namely the Unfair Commercial Practices Directive (2005/29/EC), the Consumer Rights Directive (2011/83/EU), the Unfair Contract Terms Directive (93/13/EEC) and the Price Indication Directive (98/6/EC). Amongst the measures being adopted within this Directive, there is the harmonisation of certain criteria for determining the penalties for infringing EU consumer law, enhanced transparency in online transactions, and multiple clarifications on how members states are to deal with certain consumer-related issues.
ECB SUPERVISORY BOARD CHAIR SPEAKS ABOUT OVERBANKING IN EUROPE
On the 13th November, an interview with Andrea Enria, Chair of the Supervisory Board of the ECB explored the concept of merging banking entities within Europe. Enria advocated in favour of such mergers considering several benefits related thereto, including without limitation greater efficiency gains and the creation of a more integrated European Banking sector which would in turn result in the better handling of risks. Enria further declared that his job does not entail the promotion of such merging, as he bears a supervisory role which assesses the viability and sustainability of such mergers. It was also clarified that merged entities would not be burdened with higher capital requirements from the ECB as they aspire to encourage such mergers by ensuring that the model is sustainable.
EBA OPINION ON DEPOSITOR PROTECTION IN EU
The EBA has issued a second opinion addressed to the EU Commission relating to the implementation of the Deposit Guarantee Schemes Directive (DGSD) within the Union. Generally speaking, the overarching focus of the opinion relates to payouts by deposit guarantee schemes (DGSs). Following the assessment of nine different topics related to DGS payouts, the EBA Banking & Fintech Newsletter October 2019 proposes a number of changes on how to improve the current legal framework in order to inter alia augment depositor protection within the EU, boost financial stability and increase operational effectiveness of DGSs.
SINGLE RESOLUTION BOARD ISSUES CONSULTATION ON ITS ‘EXPECTATIONS FOR BANKS’
A public consultation was launched by the Single Resolution Board revolving around its ‘Expectations For Banks’ document - a document which used to set out the capabilities expected from banks and which outlined the best practices on key aspects of bank resolvability. The SRB outlined that it will be updating the ‘Expectations for Banks’ document after affecting the required amendments and updates to the policies made.
Stakeholders are invited by the SRB to provide feedback between 23rd of October and 4th of December.
EBA’S CONSULTATION ON DRAFT AMENDMENTS TO ITS AND RTS ON PASSPORT NOTIFICATIONS’
The EBA has launched a consultation process relating to the draft amended versions of the Implementing Technical Standards and the Regulatory Technical Standards on passport notifications. The EBA is looking to receive feedback on the amendments which aim to increase the quality and clarity of the information which a credit institution would need to provide to notify its home competent authorities when proposing to open a branch or otherwise provide its services in another Member State. The deadline for the consultation process is the 13th of February 2020.
MFSA CIRCULAR ON THE AMENDMENTS TO FINANCIAL INSTITUTION RULE FIR/01/02/03
In response to the amendments implemented to the Financial Institutions Act (Chapter 376 of the Laws of Malta) which have been affected in compliance to the transposition of the Payment Services Directive (Directive 2015/2366), the MFSA has amended Financial Institution Rules FIR/01, FIR/02 and FIR/03. The amendments implemented to FIR/01 involved the introduction of payment initiation services and account information services, as well as the introduction of a new procedure for the processing of applications for registration of account information service providers. FIR/02 was amended due to the transposition of Article 9 of PSDII, which implements the method that payment institutions must use to calculate the amount of funds they must hold at all times. FIR/03 was amended in order to reflect the deletion of the waiver of application of provisions.
AMENDMENTS TO BANKING RULE BR/14
In response to the recent amendments implemented to the Banking Act (Chapter 371 of the Laws of Malta), the MFSA has issued a revised version of BR/14 on Outsourcing by credit institutions authorised under the Banking Act 1994. The amendment has relieved credit institutions from the obligation to have outsourced service providers and the provision of their services recognized by the MFSA, as now they will only have to notify the MFSA in writing.