Appeals Court reverses Financial Services Tribunal decision against MFSA

The Appeals Court reversed the Financial Services Tribunal’s ruling against the MFSA last year, which could have had severe implications for fines imposed by the regulator in recent years.

Judge Lawrence Mintoff concluded that the Tribunal had no competence to decide on the case as the issues were Constitutional.

Slamming the decision by the Tribunal Chair, lawyer Ian Stafrace, a former partner in Prime Minister Robert Abela’s legal office, Judge Mintoff said the Court was “perplexed” that such a decision had been reached by the Tribunal that had no competence to deal with such issues.

Declaring the Tribunal’s decision null and void, Judge Mintoff sent the case back to the Tribunal to decide on the other submissions made by MC Trustees Ltd against the MFSA in its original appeal.

The case involves an appeal by a company objecting to a €160,000 fine imposed by the MFSA in 2021 on alleged violations of financial services rules.

MC Trustees claimed it had suffered a breach of fundamental rights due to “a lack of fair hearing” and “lack of impartiality” because the regulator’s executive committee acted as prosecutor, judge, and jury.

The Financial Services Tribunal upheld MC Trustees’ appeal, declaring that the MFSA had infringed its own procedural rules by deciding to impose the fine.

However, Judge Mintoff decided that since MC Trustees complained about the lack of a fair hearing and a possible breach of human rights, this was clearly a case for the Constitutional Court.

Following the Tribunal’s decision last July, the MFSA filed an appeal, arguing that the Tribunal acted beyond its competence. It denied any breach of rules.

Legal sources told The Shift that while it was not excluded that the issue would now be treated at a Constitutional level, with the injured party (MC Trustees) filing a new Constitutional case, the overturning of the Tribunal’s decision ‘saved’ the MFSA from similar decisions on several other fines it had imposed on other companies using the same procedure.

The MFSA’s enforcement procedures are already subject to Constitutional challenges by different parties for breaches of fundamental rights.