The Malta Financial Services Authority ("MFSA") has published a new General Code of Conduct for Decision Makers in the Financial Services Industry, reinforcing its supervisory expectations around governance, leadership behaviour and decision-making at senior levels.
While the Code is principles‑based and non‑prescriptive, it is intended to serve as an important reference point in supervisory engagement and inspections, particularly where governance arrangements, organisational culture or the quality of judgement are under scrutiny.
The Code applies broadly to Decision Makers, including:
Importantly, the Code extends beyond formally MFSA‑approved roles. It applies, on a proportional basis, to decision makers within:
This reflects the MFSA’s focus on substance over form, ensuring that those who influence outcomes are held to consistent standards of conduct.
The MFSA has clarified that the Code:
Material shortcomings against the Code may inform supervisory measures where weaknesses in governance, conduct culture or decision‑making frameworks are identified.
The Code is built around five core values, which together illustrate how the MFSA expects decisions to be taken, challenged and owned at senior levels.
Decision makers are expected to act honestly and ethically at all times. Information provided to regulators and stakeholders should be accurate, complete and not misleading.
Conflicts of interest must be identified early, disclosed transparently and appropriately managed, while positions of influence should never be misused to obtain an improper advantage.
The MFSA places strong emphasis on the quality of judgement supporting decisions. Decision makers are expected to:
This reinforces the regulator's expectations around active engagement rather than passive approval.
The Code makes it clear that decision makers must be prepared to own their decisions and outcomes, including where outcomes are adverse.
Collective governance structures do not dilute individual accountability, and decisions should be transparent, well‑documented and defensible if subject to supervisory scrutiny.
Compliance is framed as a leadership responsibility, not a function that can be fully delegated.
The Code explicitly draws attention to sustained and emerging risk areas, including:
Boards and senior management are expected to demonstrate active oversight, engagement and understanding, rather than reliance on second‑line functions alone.
Decision makers are expected to actively foster a culture of respect, openness and constructive challenge.
The MFSA explicitly links decision‑making quality to organisational culture, signalling that governance environments which discourage challenge or debate may raise supervisory concerns.
While many well‑governed entities may already align with the principles set out in the Code, it provides a clear supervisory benchmark against which governance arrangements may be assessed.
In practice, firms should consider whether they can clearly demonstrate:
The MFSA's General Code of Conduct reinforces a clear regulatory message: good governance is not only about structures, policies and frameworks, but about how decisions are made, challenged and owned at senior levels.
Firms that can evidence thoughtful, transparent and accountable decision‑making will be better positioned to meet supervisory expectations in an increasingly complex regulatory environment.
Navigating evolving supervisory expectations around governance, leadership behaviour and decision‑making requires careful consideration at board and senior management level. Our team supports organisations in assessing governance frameworks, strengthening decision‑making processes, enhancing accountability and documentation, and responding effectively to MFSA supervisory expectations.
Get in touch to discuss what this means for your organisation.
