Should supervisory authorities be empowered to impose administrative penalties? : the Malta Financial Services Authority as a case study

Abstract

The purpose of this thesis is to assess whether supervisory authorities should be empowered to impose administrative penalties. In this regard, the MFSA was selected as a case-study because it has extensive powers to impose administrative penalties, especially when compared to other authorities. The said powers are examined in detail and compared to those of other local and foreign authorities so as to determine whether there exists a solid legal basis therefor and whether it is unusual for supervisory authorities to be so empowered. This thesis also delves into the MFSA’s decision-making process and the bodies involved therein in order to assess whether due process exists. The abovementioned assessment is carried out in light of recent developments in the judicial field which essentially challenge the empowerment of the relevant authorities to impose administrative penalties. In brief, the Court has concluded in a variety of cases that where an administrative penalty is criminal in nature, one should be entitled to a fair hearing before a court of law, as per article 39 of the Constitution. Consequently, it held that the process leading to the imposition of such a penalty by the authorities in question goes contrary to one’s right to a fair hearing as enshrined in the aforementioned provision. In light of the above, legislative reform seems unavoidable, and the financial services sector is no exception. The question is whether such reform should take place in a piecemeal fashion or as a whole. While steps were taken by the legislator to address the issue in relation to competition law specifically, the general problem remains unresolved. Concrete steps to tackle the problem must be taken lest the country ends up in a situation where its supervisory authorities, including the MFSA, are effectively rendered toothless and wrongdoers go unpunished.