Malta Financial Regulation Agencies Take Steps to Protect Consumers and Ensure Market Integrity

The Malta Financial Services Authority (MFSA) plays a vital role in safeguarding consumers of financial services and maintaining market integrity by enforcing relevant rules and regulations. In an interview, the MFSA’s Head of Enforcement, Edward Grech, explained that the authority’s lifecycle for licensed entities begins with a thorough authorization process.

Authorization Process

During this process, applicants undergo due diligence to ensure they have competence and integrity. If an applicant is granted authorization, it becomes subject to the MFSA’s supervisory oversight, which includes routine off-site and on-site supervision using a risk-based model.

Supervision and Enforcement

The authority requires licensed entities to address weaknesses in adhering to applicable requirements in a timely manner. Failure to do so may result in enforcement action, including administrative penalties or disqualifications of authorized individuals and revocation of licenses.

Consumer Protection

The MFSA’s supervisory engagement is aimed at ensuring consumer protection. The authority issues public notices on its website detailing enforcement actions taken. Additionally, it provides consumers with information on how to detect common scams and lists the latest scam warnings issued.

Scams and Fraud

Grech confirmed that scams have become more complex with the increased use of technology. Popular schemes include websites cloning legitimate sites and scams linked to forex and cryptocurrencies. Scams operate across borders and worldwide, becoming increasingly sophisticated and manipulative.

Reporting Losses

In cases where investors lose money dealing with locally licensed entities, they may seek compensation through the Office of the Arbiter of Financial Services. However, if investors incur losses when dealing with unlicensed persons or entities suspected of fraud, they should report the matter to the Malta Police Force.

Grech noted that the MFSA has seen an upward trend in scams during the coronavirus pandemic, which may be attributed to people spending more time online due to restrictions.

Protecting Yourself from Scams

To protect themselves from scams, Grech advised consumers to always check whether an entity is licensed by the MFSA and contact the authority if they are unsure. He also emphasized the importance of being cautious, stating that “if it’s too good to be true, then it probably is.”

Key Takeaways

The MFSA ensures consumer protection through its supervisory engagement and enforcement actions.
Scams have become more complex with the increased use of technology.
Investors should report losses to the Office of the Arbiter of Financial Services or the Malta Police Force depending on the situation.
Consumers should always check whether an entity is licensed by the MFSA and be cautious when dealing with financial services.