Opening a Maltese bank account? Mystery shoppers find woeful standards inside banks

A mystery shopping exercise by the MFSA has found practices that breach EU rules on opening bank accounts, especially for foreign customers

The MFSA said foreign customers were also immediately directed elsewhere to specific branches within the banks to help them with their queries.
The MFSA said foreign customers were also immediately directed elsewhere to specific branches within the banks to help them with their queries.

A mystery shopping exercise into Maltese banks by the financial regulator has found that most banks operating in Malta and Gozo are in breach of EU rules on opening bank accounts, and had even discriminated against customers based on their nationality.

The Malta Financial Services Authority found that customers seeking to open a bank account in one of several branches it surveyed, rarely do so with sufficient knowledge of the various products available. But the banks have been, in most cases, unable to provide the customers with adequate information and in some cases, discriminated against foreign customers.

A number of MFSA officials posed as customers and visited many branches of all the different credit institutions across Malta and Gozo, to assess the adequacy of information provided to customers and how banks conducted themselves.

In all these counts, MFSA found that most branches were below par and conducted their service outside the terms of EU legislation.

The MFSA said that customers were never provided with information about the types of bank accounts they were eligible for. It was only when customers insisted that this was provided.

Foreign customers were also immediately directed elsewhere to specific branches within the banks to help them with their queries.

In most cases, the customer had to insist more than once to be provided with any form of written information on the different bank accounts on offer.

In most cases, the response was dismissive, with one particular case where a customer was told to access this information on Google.

This was effectively a breach of the EU’s Payment Services Directive, which stipulates that a customer must be provided, in good time before any contractual obligation, all the information and conditions of the services upon which he can make an informed decision.

In several branches, representatives “exhibited limited knowledge when replying to requests”.

“They had difficulty explaining, among other things, differences between a savings account and a current account and there were instances where it was indicated that these were synonymous. Information provided to the same customer who visited different branches of the same bank was also inconsistent and many times, incorrect.”

And although European Banking Authority guidelines say that distributors should have the appropriate expertise and capability when explaining characteristics and risks of a product to consumers, this was not met in most branches.

“With respect to customers who were non-EU members resident in Malta, bank staff exhibited an especially detached conduct in most cases. Products to these customers were presented in different ways, even within the same branch, and in some cases, an adequate product was not presented at all when faced with a non-EU customer,” the MFSA said.

Even when customers asked for a copy of the tariff of charges, this was not forthcoming and customers were told that this was unavailable even though EU rules say customers should always be made aware of what charges they might incur before purchasing a banking product.

Following the exercise, MFSA said that it hopes that credit institutions will follow up with appropriate remedial action, especially because the service tendered by the majority of these institutions was in breach of legislation.

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