Financial providers reluctant to settle amicably, arbiter finds

Financial services providers are reluctant to resolve customer complaints when it comes to more serious cases, the arbiter for the sector has found.

In his report for 2018, Arbiter for Financial Services Reno Borg observed that while financial services providers have shown increased willingness to solve minor cases, they have generally been reluctant to conclude amicable agreements in "formal" cases.

The report, published on Monday, shows that the number of decisions delivered by the arbiter reached 139 in 2018, more than doubling the 2017 figure of 64.

The Arbiter for Financial Services is an autonomous body set up in 2016 which has the power to mediate, investigate and adjudicate complaints filed by customers against financial services providers.

Its report for last year was tabled in Parliament by Finance Minister Edward Scicluna on 25 June.

The annual report aims to not only provide a comprehensive statistical and qualitative review of enquiries and complaints processed, but also provides a summary of a number of final decisions delivered by the arbiter during the year.

In a statement the Office of the Arbiter for Financial Services said that it had substantially reduced its backlog due to more decisions being given and a small increase in the number of cases solved through mediation or during the investigation stage, where the arbiter still encourages the parties concerned to bridge their differences and reach an agreement.

All cases filed with the Office in 2016 and the vast majority of cases introduced in 2017 have been concluded, and a number of cases introduced in 2018 have likewise been closed, it noted.

Figures published in the report reveal that the number of enquiries and minor cases rose to 1,016 in 2018, bringing the total number of enquiries since the Office’s inception in May 2016 to 2,057.

Borg said that, when it came to mediation, although improvement had been improved in its use in the cases seen by the office, “there was clearly more scope to spread the mediation culture among consumers and financial services providers”.

He attributed the lack of mediatory engagement to “some complainants’ inflexibility to agree on a compromise and

providers’ apprehension that an agreement reached by mediation may lead to further complaints.”

The arbiter claimed that such fear was unfounded, since full decisions, except for the complainants’ names, were published on the Office’s web portal.

Investment services focus of vast majority of complaints

The annual report reveals that 192 complaints were received during 2018 (an increase of 10% over the previous year), with 70% being related to investment services.

Moreover, banking made up 20% of complaints, and 10% related to insurance.

A total of 54% (103) of the complaints originated from customers residing outside Malta and who acquired the services from a financial services provider mainly on a cross-border basis.

The remaining 89 complaints (46%) originated from customers residing in Malta.

Not all complaints lodged with the Office required review and adjudication, with some complaints being resolved at an early stage or after mediation.

In this regard, 33 complaints were resolved during mediation, or with the parties agreeing to settle prior to mediation.

In a further 13 cases, the parties to a complaint agreed to a suggestion for compromise during the first oral hearing.

The arbiter issued 125 final decisions as well as a further 14 preliminary and follow-up decisions (such as clarification of awards or corrections).

A hundred cases were upheld in full, three were partially upheld and 22 were rejected.