The Arbiter for Financial Services has already received 551 complaints in the year since his office was established.

Many of them, however, relate to one particular case that has already been heard by the Malta Financial Services Authority.

“Some cases have been heard by the MFSA’s Complaints Unit, but I do not necessarily have to recognise its decision,” said the Arbiter, Reno Borg, pointing to a full shelf of lever arch files all relating to the case.

“The law says I still have the right to hear it all over again, from the very beginning!”

The office of the Arbiter was set up by legislation in April 2016 to mediate, investigate and adjudicate complaints filed by customers against all financial services providers.

Dr Borg, a former Bank of Valletta chairman, was appointed in May 2016 by the Finance Minister for a seven-year tenure, and he immediately rolled up his sleeves and got to work. The first complaints were filed in June 2016, and he held his first sitting a few months later.

“You have to understand that there is a big difference between the MFSA’s unit and the Arbiter. They can only recommend, whereas our decision is legally binding. The complainant has executive title and can ask for a warrant to be issued, just as he would with a court decision.”

It is hard to assess how many complaints the office will need to handle once pent-up demand has died down. It can hear cases dating back to May 1, 2004, and in fact, most of the cases deal with past investments, rather than with currently available products.

About 80 per cent of the complaints are related to the same case and have been grouped together, while 39 others have been grouped into four more cases. That leaves around 100 individual cases.

Since September, the Arbiter has heard the great majority of cases and given decisions on many, and in spite of the fact that many are complex and take time to resolve, around 17 have been decided since then.

“I have an advantage over the courts, as my procedures are not as legalistic, not bound by the Code of Organisation and Civil Procedure. I am only bound by the need to give equal, fair hearing to both sides,” he explained.

This flexibility also applies to the use of technology; for example, in one instance, he used a Skype call to hear parties in Cyprus, the UK, Dubai and Australia, with only the service provider physically present in Floriana.

I have an advantage over the courts, as my procedures are not as legalistic, not bound by the Code of Organisation and Civil Procedure. I am only bound by the need to give equal, fair hearing to both sides

The office has also appointed a customer relations officer, who has been able to help over 330 people over the phone, not only assessing whether the complaints merited further action but also providing information – which was often enough to send the complainant away satisfied.

The office also offers mediation, prior to the case going to the arbiter, which Dr Borg is all in favour of. “In general, my staff tell me that complainants are usually more in favour of a mediated settlement than the service providers are,” he said.

“When you have a solution that was reached by both parties, it meets their aspirations. When you give a decision, no matter how good it is, then one party will feel that they have won and the other will feel they have lost. Amicable solutions are always better than a great sentence, even in court.”

Understanding what the future demand will be is important, as Dr Borg needs to ensure that he has sufficient resources. Apart from himself and the chairman – Geoffrey Bezzina, who formerly handled the MFSA’s complaints unit – the office has a staff complement of eight, which will not be enough to cope if the level of complaints maintains the same pace.

One of his concerns is that the complex sector requires technically competent staff, who are not always easy to find.

The level of resources needed is important, as the law previously said that a provider was someone licensed or authorised by the Malta Financial Services Authority to provide a service “in” Malta. But in line with the Alternative Dispute Resolution Directive of the EU, it now says “in or from” Malta – opening the door to the possibility of cross-border disputes.

The office is determined to publish its outcomes.

The Arbiter’s decisions can be appealed in court, but once the final judgment has been given – the so-called res judicata – the office can publish the decision, naming the financial service provider but not the complainant.

Apart from being compared and contrasted with the MFSA’s unit, it is only natural to compare the Arbiter to the Consumer Claims Tribunal. Dr Borg pointed out that while the tribunal awards tend to be quite small, his office can award up to €250,000 plus interest and costs to each claimant – which amounts to millions in cases with multiple complainants.

Another advantage is that if the financial service provider becomes insolvent, the Arbiter can rule that up to €20,000 be paid to each claimant from the appropriate compensation schemes.

“This is another of the advantages of coming here rather than to the court. In court, if a company is insolvent, that’s it. We have what you call concurrent jurisdiction. And it only costs €25 to file a complaint,” he said.

Apart from his concern about finding enough resources to cope with demand, there is another aspect which worries him: the law specifies that cases should be concluded within 90 days, which he feels should at the very least by amended to 90 days after all the material has been received.

“There is also the mediation stage, which can stretch out over months! Well, it is perhaps not that much of an issue, as the law says cases must not drag on for more than a year – but it also says decisions taken outside this deadline are still valid,” he shrugged.

“In any case, I am trying to close cases in no more than two sittings. So far, I have never put off any hearing. And all the sittings start on time!”

The Arbiter’s role

The Office of the Arbiter for Financial Services mediates, investigates and adjudicates complaints filed by customers against all financial services providers. The Arbiter is totally independent and impartial of all parties related to a complaint.

Complaints may be filed against banks, financial institutions such as Bureau de Change, insurance companies, insurance intermediaries such as agents and brokers, investment services providers such as financial advisers and stockbrokers, trustees and pension providers.