Christmas Eve legal notices usher in higher fees for financial services operators
Government publishes eight legal notices on Christmas Eve introducing higher fees for financial services practitioners from 1 January • Opposition calls them a 'blow' to sector • Finance Ministry says stakeholders ag
Updated at 2:52pm with Finance Ministry reaction
Operators in the financial services sector found higher fees waiting for them beneath the Christmas tree after government published eight legal notices on Christmas Eve.
The new higher fees requested by the Malta Financial Services Authority came into force on 1 January 2025 with no prior announcement by the government. The legal notices were published in the Christmas Eve edition of the Government Gazette.
The legal notices cover application fees and annual supervisory fees across all areas of the financial services sector, including banks, trusts, retirement funds, insurance and crypto assets.
Tables attached to the legal notices show that the new higher fees will start in January and will continue increasing every year for the next four years.
MFSA fees have remained unchanged for many years and are relatively low when compared to the vast amounts of money that are transacted. The authority has been mulling since 2019 the introduction of higher fees to reduce its dependence on government funding as it expanded its regulatory operations.
However, the authority never publicly disclosed the new fees until they were published last week by the government in the middle of the holiday season when no one was noticing. Nonetheless, the Finance Ministry is saying (see below) that the new fee structure had been discussed with stakeholders and they 'generally agreed' with it.
Finance Minister Clyde Caruana had made no mention of the higher fees in his budget speech last October.
The fee increases represent a sudden 100% increase in some cases. The minimum supervisory fee for banks will double from €25,000 to €50,000 in 2025, and continue to increase annually to €75,000 in 2029. The maximum supervisory fee for banks will increase from €1.2 million to €1.7 million this year and remain static until 2029.
An insurance agent or broker who used to pay an application fee of €175, will now have to pay €200 in 2025, rising up to €300 in 2029. Meanwhile, the annual supervisory fee for agents and brokers will increase from €200 to €250 in 2025 and will double to €400 by 2028.
Higher fees criticised by Opposition
Meanwhile, Nationalist Party spokespersons Graham Bencini and Jerome Caruana Cilia said the higher fees are “another blow” to the sector.
In a statement on Friday, they said this “tax burden will ultimately fall on clients”, lamenting the fact that no mention of the higher fees was made in the budget.
“These taxes were not announced at any grand press conference under a large tent in front of Castille but were instead quietly introduced during the Christmas festivities,” Bencini and Caruana Cilia said.
Finance Ministry says stakeholders agreed with reform
The Finance Ministry said the revision of fees was a recommendation made by the IMF to the MFSA so that it could cover the resources required by the authority to supervise and regulate the sector.
"The increase in licensing fees is targeting those areas that are exposed to certain risks, hence unlike the impression given by the PN, families will not be impacted," the ministry said.
It added that the authority's functions have increased exponentially over the past 10 years, as has the financial services sector. Nonetheless, the fees due to the authority generally have remained unchanged since 2014.
"This reform is but a natural consequence of the changes and developments which took place over the past decade. Furthermore, as an international financial jurisdiction Malta cannot attract prospective investors and licence holders just because it is unreasonably cheap. Notwithstanding the increase in fees, Malta remains competitive when compared to other jurisdictions. The said fees were raised just enough to partially cover for the abovementioned resources without exceeding the equivalent fees set in other jurisdictions," the ministry explained.
It added that a consultation session was held a few months back with the Stakeholder Panel set up by the MFSA where the new fee structure was presented to industry representatives. After the session, feedback was received and taken into consideration during the drafting process, the ministry said. It added: "It was generally agreed by the attending representatives that the proposed fee reform was long due."
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