Review of the powers and functions of the regulatory authorities in the financial services sector

Abstract

As the title suggests, the principle objective of this thesis is to examine the regulatory and supervisory structure, mechanisms and techniques with which the regulators ensure a proper functioning and viable financial services market. I believe that in years to come, the local financial services market will be playing an even increasing role in the global market. This will happen not because of new legislation or regulations, but because of the evolving nature of the financial markets themselves. This work is largely based on primary sources, that is, materials such as regulations, rules, statutes and judicial decisions. The occasional difficulty of obtaining current foreign material, especially relating to the Italian position, made it necessary also to use information printed in newspapers and journals. The background against which the whole subject falls to be considered is set out in Chapter one. It is mainly concerned with the financial services reform which occurred in Malta and in UK in the past few years. Chapter two then relates to the notion of 'regulatory agencies' or 'competent authorities', and whether there should be a single or a multi-tier regulatory structure. It also examines the composition and main regulatory features of local and foreign regulatory bodies. Chapter three deals with a discussion on the scope, objectives and rationale of regulation, the advantages and disadvantages of self-regulation, the trend of de-regulation and whether these are sufficient controls to promote safety and soundness. The core of the whole work is contained in Chapter four which provides a review of the regulatory and supervisory powers, functions, duties, compliance and intervention powers of the regulatory bodies. In Chapter five, the whole issue revolves around the manner in which the regulatory decisions can be challenged by aggrieved individuals in the appropriate Tribunals. Finally, Chapter six examines the possibility of an action against the regulator if the latter fails in the discharge of its statutory functions. It examines the legislative immunities and on the basis of several key cases determines whether liability for negligence can be imposed on the basis of the general principles of law. On one hand it may be argued that an investor who suffers loss as a result of a regulator's carelessness has a moral or other claim to compensation from that body. On the other hand, there is a potentially open ended liability to an indefinitely large number of cases against regulators if such a claim is allowed.