The Arbiter for Financial Services and competence for own investigations

The Office of the Arbiter for Financial Services is a self-governing and autonomous institution with the ability to arbitrate, investigate, and resolve complaints lodged by eligible customers against financial services providers regulated by the Malta Financial Services Authority (MFSA), Malta’s financial services regulator.

The role of the Arbiter itself stems from the Arbiter for Financial Services Act Chapter 555 of the Laws of Malta. It provides the necessary legal framework for the appointment, functions, powers, and competence of the Arbiter. The role of the Arbiter and his competence at law in carrying out his own investigations was deliberated in a judgement delivered by the Court of Appeal (Inferior Jurisdiction) in Christine Helen Morrison -v- Momentum Pensions Malta Limited on the 23rd February 2022. The Court was presided over by Mr Justice Lawrence Mintoff.

This case relates to the loss suffered by the respondent of an appeal, Morrison from the investment in a retirement scheme managed by the appellant company, of the life insurance policy issued by Skandia International which later became known as Old Mutual International which policy was known as the Executive Investment Bond. This occurred after the respondent had consulted Continental Wealth Management which she had appointed as her financial advisor for the purpose of investing the premium of that policy.

In deliberating the second aggravation of the appellant company,  Momentum Pensions Malta Limited , that the Arbiter concluded that Momentum is to bear partial responsibility of the losses incurred by the complainant and attributes responsibility at 70% of the losses incurred, the Court briefly delved into the role of the Arbiter and his power to investigate.

The Court here considered what was pointed out by the appellant company that the Arbiter decided to voluntarily investigate the investments by sourcing their fact sheets. The Court also considered the Arbiter’s observation saying that this fact certainly did not help the appellant’s defence, where it is still questionable whether in so doing it concealed details or information which were not in favour of its defence.

As defined by Article 25 of Cap.555, the Arbiter for Financial Services Act, the Court further considered that the Arbiter did not do anything outside of his competence which does not allow him to seek additional information. There was no doubt to ensure that he was deciding the complaint within the parameters of para (b) of sub-article 19 (3) of the same law, which states, “In carrying out his functions under sub-article (1), the Arbiter shall ... determine and adjudge a complaint by reference to what, in his opinion, is fair, equitable and reasonable in the particular circumstances and substantive merits of the case.” The Court noted that the result of his probe can only show how right he was in not interrupting his investigation due to the limited information which was available to him.

The appellant company also complained that it never had the opportunity to take cognisance of the information elevated from the fact sheets, but it follows from what the Arbiter stated that the information was not even difficult to obtain. In fact, one could have acquired this information through a simple online search. This information was therefore available to the public, including to the appellant company.

In doing so, the appellant company also had every opportunity, but after all failed to do so, to challenge that information obtained. However, the Court considers that if it were to believe that the appellant company never had this information at its disposal, indeed it would be in breach of any bonus paterfamilias obligation.

In other words, this information was not concealed from the appellant company and any reasonable man could have had access to it.

Whilst the Court upheld the Arbiter’s decision in its entirety it, the Court further commented by applauding the Arbiter’s concise and diligent decision. The Court dismissed the appeal and confirmed the Arbiter’s decision.