Financial services practitioners ‘concerned’ about Mifsud’s appointment

Financial services practitioners are “concerned” over the appointment of Alfred Mifsud as the new arbiter of financial services for several reasons, not least of which is the fact that he had been found guilty by his predecessors in the position on 66 occasions, according to Opposition spokesperson for finance Jerome Caruana Cilia.

Several court appeals on those rulings also harshly reprimanded Mifsud for misselling complicated financial products, failing to inform clients that their investments were doing poorly and increasing clients’ risk appetites without their approval.

The Shift reported last Sunday how, despite the dozens of breaches and his reprimands by the Court of Appeal, Mifsud will now be tasked with handing down judgement on financial services operators when he has quite possibly been found guilty of the very same breaches.

Caruana Cilia said his afternoon, “We need to strengthen Malta’s reputation and not destroy it. After the humiliation of Malta’s grey-listing, it seems that [Prime Minister] Robert Abela has learned nothing.

“This is a government that seizes the institutions and, in the process, damages the financial services sector and the country’s reputation.”

Citing The Shift’s report from last Sunday on Mifsud’s not-so-rosy past with the financial services arbiter, Caruana Cilia said the appointment was a “cause for concern for everyone who cares about the financial services sector”.

“It seems that Robert Abela’s priority remains to seize the institutions, and not the reputation of the industry and the livelihood of those who depend on it.

Mifsud sold his private business, Crystal Finance, in 2015 in the wake of the cases. After that, he was appointed as deputy governor at the Central Bank of Malta during the Joseph Muscat administration. Muscat used to work for Mifsud at Crystal Finance.

Many of those cases went to the appeals court.

In one such case, the Court of Appeal presided over by Mr Justice Anthony Ellul found it could “not understand how the client, an old woman who can’t even read and write, could ever understand all those things [she was being sold].

“For the court, it was obvious that that was not a suitable product for her and her husband, no matter what [investment advisor] Michelle Stanmore and Alfred Mifsud say.”

The woman had been sold a financial product with a CCC- rating that had been classified as medium risk although, according to the court, a CCC- rating “gives a clear picture of high risk”.

In a scathing judgement, the court found, “From the evidence it does not appear that the client had any knowledge and experience in the field of bonds about that specific product.

The court also had “no doubt” that Crystal Finance, under Mifsud, breached the client’s trust when it spent “a whole year watching the value of the investment drop and did not speak to her”.

In another case, a client sued Crystal Finance for failing to inform him in time that the stock portfolio it created for him was failing miserably.

The same judge found it was clear that the investor depended upon information from Crystal Finance to make his portfolio decisions. But, the court found, “When the crucial time came, Crystal Finance decided to not inform the client in a timely manner about the situation.”

Moreover, the court found that it could not understand how “after a suitability test was carried out that established a medium risk appetite for the client, Crystal Finance advised him to buy into a high-risk investment.”