Study-Unit Description

Study-Unit Description


CODE CML4007

 
TITLE Introduction to Financial Services Legislation

 
UM LEVEL 04 - Years 4, 5 in Modular UG or PG Cert Course

 
MQF LEVEL 6

 
ECTS CREDITS 8

 
DEPARTMENT Commercial Law

 
DESCRIPTION The first part of the study-unit shall incorporate an extensive overview of the principles and techniques involved in the regulation of financial services generally and in Malta. It shall investigate the various structures and remedies set out in the applicable legislation for the protection of the investor. The law primarily relevant for this part of the study-unit is the Malta Financial Services Authority Act which will be considered in detail for its implications both domestically and internationally.

The following issues and questions shall be covered:
1. What are financial services and why are they regulated?
2. The concept of regulation and the objectives of financial services legislation
3. Regulatory agencies in Malta: their role and functions
4. Investor protection and consumer protection
5. Justification for protecting investors, and principles and techniques of investor protection
6. Developments in the regulation of financial services 1994 - 2007
7. The role, functions and structure of the Malta Financial Services Authority
8. The concept of a single regulator, and the relative advantages and disadvantages
9. The International Dimension:
a. Regulatory arrangements in a number of selected countries
b. MoU’s and exchange of information and collaboration between regulators
c. The EU - the impact of directives, the single passport and the broad legal framework
d. The WTO - basic principles and the liberalization process for financial services providers

The second part of the study-unit deals primarily with the regulation of the financial markets. An overview of the Financial Markets Act will be provided. The listing process will be dealt with in general together with the role and functions of the Listing Authority. The student will be introduced to the prevention of Market Abuse legislation as well as the prevention of Money Laundering legislation.

The Second part of the study-unit

This Part tackles financial services in line with the classical three sub sectors namely, Banking, Insurance and Investment Business. Each of these topics will be dealt separately in view of the specialized and individual manner which each of these sub-sectors has developed and will continue to develop although clearly they complement each other and are in fact grouped under this one study-unit.

Banking Law
This part of the study-unit examines the two basic divisions of the law of banking - institutional and private banking law. Under institutional banking law, bank regulation will be considered. The bulk of regulation emanates from the Banking Act (Chapter 371 of the Laws of Malta); from the Financial Institutions Act (Chapter 376 of the Laws of Malta); and from the Rules issued thereunder. Topics under private banking law include bank guarantees, professional secrecy and the duty of confidentiality, the juridical nature of the bank account and some civil law notions in relation to banking law.

Insurance Law
The law of insurance section of this study-unit would include the nature of the contract of insurance; kinds of insurance; principles of the law of insurance; definition and essential elements of the contract of insurance, formation of the contract of insurance; assignment of the insurance policy; termination of the contract of insurance. The study-unit will also examine the theories of insurable interest, conflict of laws, reinsurance, utmost good faith, premiums, construction of the policy, causation, measures of recovery, subrogation, protected parties, nature of the loss, concealment, and rights at variance with policy provisions, double insurance. Finally the study-unit will analyse liability insurance, life insurance, accident insurance and motor vehicle insurance.

Investment Business Law
This study-unit examines the framework for the regulation of investment business under Maltese law principally, the Investment Services Act, 1994, the Rules for Investment Services Providers and Related Guidance Notes, the Rules for Recognised Persons and Retail Collective Investment Schemes and The Professional Investor Fund Rules. The study-unit also covers the applicable EU harmonizing measures, principally the MIFID, UCITS and AIFM Directives and the relevant implementing measures. The provisions of the Companies Act, 1995 and The Trusts and Trustees Act, 1989, relevant to collective investment schemes are also considered.

Aspects covered during the study-unit include the objectives of regulation, the competent authority, the scope of regulation, relevant instruments and services, the licensing regime for investment services and collective investment schemes, EU passporting as well as the prospectus and advertising regimes. Investor protection issues will be addressed together with the obligations of license holders and the powers and functions of the competent authority, including judicial review.

The study-unit will also introduce students to alternative corporate and non-corporate vehicles which are typically used in structuring collective investment schemes such as the SICAV and INVCO, the Limited Partnership and contractual and trust-based vehicles. Attention will also be given to the roles and duties of the key players and service providers involved in the operation of a collective investment scheme, such as the manager, administrator, investment advisor and prime broker.

Study-unit Aims:

This study-unit aims to analyze the extensive frame work whereby Financial Services are regulated under Maltese Law including the measures introduced to safeguard the interest of investors and other consumers of Financial Services. The study-unit will cover the main legislation introduced in this sector and will try to ensure that students acquire sufficient knowledge and skill in understanding and applying the legal measures introduced by Law to regulate Financial Services operators and the Framework of protection for Consumers.

Learning Outcomes:

1. Knowledge & Understanding:
By the end of the study-unit the student will be able to:

- Master the basic concepts and structures of financial services concepts and structures of financial services law which can help them pursue studies further at Masters Level;
- Acquire sufficient knowledge and skill in the sector generally and its sub-sectors more specifically, Banking, Insurance and Investment Services;
- Place financial services legislation within the context of other legislation and to appreciate this new fast developing area of law and a practical understanding of its peculiar concepts, remedies and structures.

It may come as a first vital step for students interested in pursuing a career in the financial services industry which has developed into a major platform of the Maltese Economy.

Students will accordingly acquire reasonable understanding of how Financial Services are regulated domestically and internationally.

2. Skills:
By the end of the study-unit the student will be able to:

- Master the concept of banking as an important sector of financial services, and to discover the significant academic, professional and practical importance of this activity.

- Learn comprehensively the details of local banking legislation, in both its primary and subsidiary forms, and is introduced to the regulation of banks in Malta, and to assess the practical impact of such regulation.

- Acquire a greater sensitivity towards the need for depositor protection.

- Gain a comprehensive understanding of the law relating to bank accounts and bank guarantees and the skills to manage their practical utilization.

- Identify and appreciate the Civil law provisions which influence the bank-customer relationship.

- Develop their ability in placing the different sources of law within one contest.

- Apply local legislation regulating the duty of professional secrecy/bank confidentiality in the interest both of Banks and their customers.

- Acquire the necessary ability to handle the basic notions and principles of general insurance law and its practical implications and applications.

- Acquire familiarity with the rules governing the regulation and supervision of insurance business in Malta and its practical impact.

- Gain capability to apply in practice the more specialized aspects of this complex and constantly developing subject, as well as acquire a high degree of academic and practical preparation in understanding the insurance market (insurers, brokers, agents), the types of policies available on the market (property, liability, all risks); the placement of an insurance risk; the nature of the insurance contract; claims handling; and other essential notions of high practical value such as settlement, discharge, subrogation and recovery.

- Master the relevant rules that govern the domestic and relevant European legal underpinnings of the regulation of investment business and investment funds as a growing practice area.

- Gain the ability to handle and appreciate both the regulatory and practitioner perspectives to bear on the subject matter, with insights into market practice and current developments and to be able to work in an environment which involves investment funds and financial markets.

Main Text/s and any supplementary readings:

An Introduction to Maltese Financial Services Law, 2009, Allied Publications Law Theses:
1. The Regulation of Investment Services – A comparative study; 1997; Roderick Zammit Pace
2. Review of the Powers and Functions of the Regulatory Authorities in the Financial Services Sector; 1997;Vanessa Grech
3. The Law of Investor Protection with Particular Reference to Maltese Law; 1999; Omar Grech
4. The Protection of the Financial Services Consumer under Financial Services and Consumer Legislation; 2003; Joseph Bugeja
5. Aspects of Financial Services Legislation in the light of Administrative Law and Human Rights; 2003; Danielle Mallia
6. International Aspects of Maltese Financial Services Legislation; 2005; Gabriella V Zammit
Aspects of Maltese Law for Bankers - Philip Farrugia Randon.
EC Banking Law - Marc Dassesse, Stuart Isaacs and Graham Penn - LLoyd's of London Press Ltd.
Bank Guarantees in International Trade - Roeland F Bertrams - Kluwer Law International.
Law of Guarantees - Geraldine Andrews and Richard Millett - Sweet & Maxwell.
The Law of Insurance Contracts by Malcolm A. Clarke, Lloyd’s of London Press Ltd, 1994, Second Edition.
Insurance Law - Text and Materials by Ray Hodgin, Candevish Publishing Limited, 2002, Second Edition.
General Principles of Insurance Law by E.R. Hardy Ivamy, London Butterworths 1986, Fifth Edition 1986.
Modern Insurance Law, by John Birds, Sweet & Maxwell, 1997, Fourth Edition.
Insurance Law - Doctrines & Principles by John Lowry & Philip Rawlings, Hart Publishing, 1999.

A full list of literature and reading materials will be made available during the study-unit. Students are also referred to the following primary materials:

Guide to Financial Services Regulation, Third ed., B. Rider, C. Abrams and M. Ashe.
The Financial Services and Markets Act: A Practical Legal Guide, J. Perry.
Introduction to Collective Investment Schemes, January 1996, Vol. I and II – Materials produced by the Financial Services Law Section of the Chamber of Advocates.
Encyclopaedia of Financial Services Law, E. Lomnicka and J. Powell.

 
ADDITIONAL NOTES Students taking this study-unit need to have a background in law.

 
STUDY-UNIT TYPE Lecture

 
METHOD OF ASSESSMENT
Assessment Component/s Assessment Due Sept. Asst Session Weighting
Examination (2 Hours) SEM1 Yes 100%

 
LECTURER/S Matthew Bianchi
Leonard Bonello
David Fabri (Co-ord.)
Stephanie Farrugia
Anthony T. Fenech
Catherine Formosa
Joseph Saliba
Ilona Schembri

 

 
The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints.
Units not attracting a sufficient number of registrations may be withdrawn without notice.
It should be noted that all the information in the description above applies to study-units available during the academic year 2023/4. It may be subject to change in subsequent years.

https://www.um.edu.mt/course/studyunit