European passport rights and their effect on the Maltese financial services industry

Abstract

The creation of the concept of the "European Passport" marked a significant step in the elimination of barriers in the European Union's ("EU") financial services sector. The "European Passport" implies that legislation which restricts cross frontier branching and freedom of services, must give way to the rights inherent in the said passport. Indeed the essence of the said right lies in the premise that each Member State is given the task of authorising and prudentially regulating its "home" financial services enterprises. Such home authorisation would confer a "single European passport" on the enterprise which would then be recognised throughout the rest of the EU. Throughout the present dissertation runs an effort at explaining the concept of the "European Passport Right" and at analysing the manner in which this right has affected the Maltese financial services industry to date. Chapter One sets out the salient concepts against which the entire study should revolve. The Chapter gives an outline of the fundamental freedoms that lie at the core of passporting, of the development of the concept of "European Passport Rights" and of the salient characteristics inherent in the passporting regulations. Chapter Two gives an overview of the relevant pieces of legislation (both local and EU based) which must be looked at when putting the general concepts of passporting into practice. This Chapter indicates the relevant regulations to be referred to and sets out the procedure to be followed under Maltese law by European and Maltese Licence Holders intending to make use of their European Passport Right. Chapter Three purports to give an outline of the purview of roles of the home and host country supervisors with particular reference to the role played by the MFSA as a host State authority. The concept of the "general good" is looked into in the light of the Maltese "applicable provisions" which European Licence Holders must abide by when they passport to Malta. In addition this Chapter aims at identifying the manner in which the MFSA has played a central role in aiding the Maltese financial services industry to reap the full benefits of passporting and in particular the manner in which, by strengthening its role as regulator, the MFSA has also benefited the Maltese financial services industry at large and has added to the attractions of Malta as a financial services base. Indeed Chapter Four gives an indication of the manner in which the Maltese financial services industry has not only prepared itself, but viewed the influx of foreign presences in Malta, also as a result of passporting, as a challenge to be faced proactively. An analysis will be made not only of the figures relevant in this scenario, but also of the manner in which passporting has in practice affected the local industry to date.