Malta’s Office for Competition investigating banks over complaint by Consumers Association

The Government has confirmed that the Office for Competition is investigating banks over concerns raised by the Consumers Association in relation to the introduction of account fees.

Minister for Tourism and Consumer Protection Clayton Bartolo was responding to a parliamentary question raised by Opposition MP Joseph Ellis, where he asked what steps are being taken to ensure there is no collusion between commercial banks in the setting of interest rates on deposits and loans and the tariffs charged to consumers.

Mr Bartolo’s reply refers to a complaint raised by the Consumers Association on 19th February to Godwin Mangion, the director general of the Office for Competition within the Malta Competition and Consumer Affairs Authority (MCCAA).

The Consumers Association said it had received a number of complaints referring to an increase in bank charges or the levy of new charges during 2020 and 2021 by BOV and by HSBC.

HSBC for example announced in February that it would be moving forward with plans to charge a monthly €5 Customer Account Fee, albeit with a wider list of exemptions, after negotiations with the Central Bank of Malta and the Malta Financial Services Authority.

Noting that both banks have a dominant position in the local commercial banking sector, the Association said that the new or increased bank charges need to be considered also in light of the fact that the interest rates given to deposits are decreasing.

It said that during the same period, these banks imposed a 0% interest rate on many accounts.

“Such a situation means that the consumer is already paying a fee for having an open bank account, since while the consumer is receiving a pittance for the deposits the banks are using these deposits to provide lending to other consumers and to businesses and thus making a profit on the deposits,” said the Consumer Association.

“If we take BOV last September, [it] introduced at least 11 new charges and increased at least 22 other charges.”

Turning to the controversial introduction of bank account fees, the Association said that these “are having a very negative effect on pensioners and other vulnerable consumers”.

The Consumer Association said that “consequently a significant portion of the population may well end up not being able to afford to have a bank account […] this more so in an environment where there is pressure on consumers to shift to digital methodology.”

It urged the Competition Office to give priority to this complaint and trusts that if the Office determines that there are grounds to take action, it will act accordingly.

The complaint was filed under Article 14A of the Competition Act on the basis that these measures constitute conduct which “is or appears to be significantly harming the interests of consumers”.