Higher accent on consumer protection in financial services

One of the functions of the new Malta Financial Services Authority will be the promotion of the general interests and legitimate expectations of consumers related to financial services.

Another function would be to promote fair competition practices and consumer choice, Finance Minister John Dalli said yesterday

This means that while enforcement and compliance would continue to form the core activity of the financial watchdog, new legislation currently before parliament will be promoting consumer education and consumer protection to the same level of importance, he said.

Mr Dalli, who was speaking at a conference on consumer protection at Palazzo Parisio, said it could be claimed that a silent revolution had been carried out in the whole area of financial services regulation.

The most tangible effect of all this can be seen in the variety and extent of the financial products and services that are available in the market today.

However, he added, regulation was continually facing new challenges reflecting the dynamism of the market both locally and internationally.

"Recent events and developments in the financial world have shown that good institutions are not necessarily a guarantee of good products and acceptable selling practices.

"It is becoming increasingly clear the world over that even competent and solid institutions might offer inappropriate products in an aggressive manner.

"In addition to this, unsolicited requests for investments by unregulated companies and individuals, particularly through the internet, but also through the mail and over the phone, are becoming increasingly common.

"These practices give rise to concerns and the regulator has to be able to react appropriately," he said.

Mr Dalli mentioned two laws that were designed to provide better protection for the Maltese consumer.

One of these laws was the law governing competition in Malta which established the Office for Fair Competition and the Commission for Fair Trading and introduced new concepts such as abuse of dominant position, restrictive agreements and concerted practices.

The second important law was a Consumer Affairs Act that enshrined a set of principles based on the fair treatment of the consumer.