EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 6 February 2018  
on funding sources and governance of the Malta Financial Services Authority  
(CON/20 18/6) 
 
Introduction and legal basis  
On 22 December 2017 the European Central Bank (ECB) received a request from the Central Bank of 
Malta, acting on behalf of the Parliamentary Secretariat for Financial Services, Digital Economy & 
Innovation,  for an opinion on a draft law proposing  amendments to the Maltese Financial Services 
Authority Act  (hereinafter the ‘draft law’) . On 8 January 2018 the ECB received additional information from 
the Central Bank of Malta with further proposed amendments to the draft law.  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union as the draft law  concerns the specific tasks conferred upon the ECB 
concerning the prudential supervision of credit institutions under Article 1 27(6) of the Treaty . In 
accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion.  
 
1. Purpose of the draft law  
1.1 The proposed amendments to the Malt a Financial Services Authority  Act (hereinafter referred to as 
the ‘MFSA Act’)  stem from feedback from stakeholders to a consultation document entitled 
‘Strengthening the Malta Financial Services Authority; Taking the financial sector to a new level1, 
which  was issued in August 2017. During the consultation process, stakeholders called for greater 
levels of efficiency and effectiveness of the MFSA, echoing similar views expressed by the 
European Commission, the European supervisory authorities and the Intern ational Monetary Fund  
(IMF)2. 
1.2 The draft law  propos es amend ments to the MFSA Act in order to strengthen the governance 
structure of  the MFS A through the creation of a Chief Executive Officer (CEO)  position. The CEO  
will be responsible for the MFSA ’s overall performance in terms of  the achievement of its  objectives 
and implementation of its strategy and policies , as set out by the Board of Governors. The CEO  will 
be appointed by the Board of Governors  and will be a non- voting member of the Board.  
1.3 The MFSA currently manages Malta’s Registry of Companies , and the Registrar of Companies is 
an MFSA senior official appointed by the Minister of Finance on the advice of the MFSA, pursuant 
                                                 
1  Available on the Prime Minister of the Republic of Malta’s website at www.opm.gov.mt.  
2  See t he IMF ’s Staff Concluding Statement of the 2017 Article IV Mission on Malta from 17 November 2017,  available 
on the IMF’s website at www.imf.org . 
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2 to the Companies Act3. The draft law  proposes to separate the function of Registrar of Companies 
from the MFSA . In particular , the Registrar will no longer be a member  of the MFSA Coordination 
Committee and the Registry of Companies will thereby be separated from the MFSA. This is 
complemented by the deletion of references to the Registrar of Companies in the MFSA Act.  
1.4 The draft law also address es the financial provisions of the MFSA Act . It proposes that any sums 
required by the MFSA for carrying out any of its functions will be paid out of the Maltese 
Government’s Consolidated Fund and without further appropriation.  In preparing the estimates of 
the MFSA’s income and expenditure for a given financial year, the MFSA must  take account of any 
funds and other moni es that may be due to be paid to it from  the Consolidated Fund during the 
relevant financial year . The MFSA must also aim  to ensure that its total revenues are sufficient to 
cover all sums properly chargeable to its income and expenditure account. A House of 
Representatives  committee will examin e the estimates and report  its findings  for consideration by 
the House of Representatives. Where, in respect of any  given  financial year , it is found that the 
amount approved by the MFSA Board of Governors is not sufficient or a need has arisen for 
expendi ture for a purpose not provided for in the estimates, the MFSA Coordination Committee 
may adopt supplementary estimates for approval by the Board of Governors and for consideration 
by the House of Representatives following examination by the abovementioned  committee. The 
sums referred to in the estimates will be fixed by resolution of the House of Representatives after 
considering the estimates prepared by the MFSA and the committee report.  
1.5 The separation of the Registry of Companies from the MFSA will have a significant impact on the 
revenue of the MFSA. However , the Government is determined to guarantee the MFSA’s full and 
effective autonomy as a public institution reporting to the House of Representatives. To this end, 
the annual budget of the MFSA wi ll no longer depend substantially on the income of a structure – 
the Registrar of Companies –  that is statutorily not within the MFSA’s responsibility.  
 
2. Observations   
2.1 Pursuant to Article 127(6) of the Treaty and Article 6 of Council Regulation (EU) No 1024/20134, 
the ECB carries out its tasks within a single supervisory mechanism (SSM) composed of the ECB 
and the national competent authorities (NCAs). Within the framework for cooperation within the 
SSM, t he ECB is responsible for the effective and consi stent functioning of the SSM, and both the 
ECB and NCAs are subject to a duty of cooperation, and an obligation to exchange information.  
Where appropriate and without prejudice to the responsibility and accountability of the ECB for the 
tasks conferred on it by Regulation (EU) No 1024/2013, NCAs  are responsible for assisting the 
ECB, under the conditions set out in Regulation (EU) No 468/2014 of the European Central Bank  
(ECB/2014/17)5, with the preparation and implementation of any acts relating to the tasks 
                                                 
3   See Article 400 of the Companies Act  and Chapter 386 of the Laws of Malta.  
4  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions ( OJ L 287, 29.10.2013, p. 63) . 
5 Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for 
cooperation within the S ingle Supervisory Mechanism  between the E uropean Central Bank and national competent 
authorities and with national designated authorities  (SSM Framework Regulation)  (OJ L 141, 14.5.2014, p. 1).  
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3 conferred on the ECB under Article 4 of Regulation (EU) No 1024/2013 related to all credit 
institutions, including assistance in verification activities6.  
2.2 Taking account of the foregoing responsibilities of the MFSA within the framework of the SSM, t he 
ECB would like to point out that, when considering the MFSA’s resources,  the Maltese authorities 
should take into account  the SSM’s need for NCA staff on joint supervisory teams and inspection 
teams and the more intense supervision expected for less signif icant institutions7. 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main,  6 February 2018.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                 
6  Without prejudice to certain provisions of Regulation (EU) No 1024/2013, NCAs shall carry out and be responsible 
for certain tasks and adopting all relevant supervisory decisions with regard to certain less significant credit 
institutions or financial holding companies. Wherever the ECB is assisted by national competent authorities for the 
purpose of exercising the tasks conferred on it by Regulation (EU) No 1024/2013, the ECB and the NCAs shall 
comply with the provisions set out in the relevant Union acts in relation to the allocation of responsibilities and 
cooperation between competent authorities from different Member  States.  
7  See paragraph 2.4 of Opinion CON/2016/43.  All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu.