The Arbiter for Financial Services


The Government of Malta has published a bill to set up the office of the Arbiter for Financial Services, who will have the power to mediate, investigate and adjudicate complaints filed by a customer against a financial services provider.

The novelty about this bill is that the first method of reconciliation which needs to be followed is that of mediation, and it is only if this method fails or one of the parties withdraws, that the arbiter will deal with an investigation in private. This however, does not preclude the arbiter to conduct an investigation following a written complaint in any case.

The two main functions of the arbiter shall be that of dealing with complaints and to inform the general public on the functions of the office of the arbiter.

Who may bring an action?

In terms of the bill, any natural person (including his successors in title) or a micro-enterprise may bring an action.

A micro-enterprise is defined as an enterprise with less than 10 employees and whose annual turnover or balance sheet total does not exceed the €2,000,000.

Against whom may the action be brought?

An action may be brought against any financial services provider, which includes investment services, banking, financial institutions, credit cards, pensions and insurance, which has offered its financial services in Malta (even if the institution is a resident of another EU/ EEA member state).

What is the penalty?

The maximum penalty which may be granted is that of €250,000, together with any additional sum for interest and other costs due.

When may the arbiter decline to exercise his powers?

The bill also provides for instances where the arbiter may decline to exercise his powers:

  • If the complaint is or has been subject of a law suit before a court or tribunal;
  • If the complaint is in the opinion of the arbiter frivolous or vexatious;
  • It results that the customer did not allow the financial services provider a reasonable opportunity to deal with the complaint prior to filing a complaint with the arbiter.

The arbiter will hold office for a term of up to 5 years and may be eligible to reinstatement for one other term of 5 years. After this 10-year period the arbiter shall not be eligible for re-appointment.

Last May, Dr Reno Borg was handed a four-year term as Arbiter, Dr Borg is a lawyer by profession.