Time to issue a decision on complaints ‘significantly decreased’ in 2023 – Arbiter for Financial Services

On Friday (today), the Office of the Arbiter for Financial Services (OAFS) shared that the time taken to issue a decision on complaints lodged at the office, once the case file was completed, “significantly decreased” in 2023.

This was highlighted in the OAFS Annual Report for 2023.

It stated that decisions on banking-related complaints took an average of 106 days, down from 170 in 2022, while insurance-related cases took around 88 days, down from 134 in 2022.

The OAFS offers an independent and impartial process to resolve disputes filed by customers against financial services providers, outside of court.

It has the authority to issue awards up to €250,000, other than interests and other costs, to each complaint for claims arising from the same conduct.

In 2023, the OAFS registered 224 new formal complaints, an increase of 48 per cent over 2022.

The banking and payment services sector saw a substantial increase in complaints with 122 cases in 2023, compared to 39 in 2022.

The majority of these complaints were filed against one financial entity that subsequently faced regulatory action.

In 2023, 137 final decisions were issued, with 81 cases not upheld, 50 partially upheld, and six fully upheld.

Out of the 81 cases that weren’t upheld, 14 were rejected on legal merits, 20 were outside the Arbiter’s competence, 45 had unproven merits and two were described by the report as being “frivolous and vexatious.”

In total, the Arbiter awarded €809,000 in compensation, excluding interest and costs.

During the year under review, the OAFS held 80 mediation sessions. Out of these, 30 cases were successfully resolved, 21 were withdrawn before mediation, and 12 cases were withdrawn following mediation.

“Cases not resolved at mediation proceeded directly to the arbiter, along with other cases in which the parties did not wish to refer their case to mediation,” the report said.

Throughout the year, the Arbiter developed a model for allocating responsibility between the payment service providers (PSPs) and payment service users (PSUs) for cases of payment fraud scams.

“This has been well received and adopted by Malta’s largest banks,” the report highlighted.

The report also shared legislative work carried out to enhance the OAFS’s operational efficiency, improve consumer protection, and provide legal clarity on prescription interruption. The Office’s proposed amendments to the Arbiter for Financial Services Act were enacted in the first half of 2024.

In addition, it actively engaged with different stakeholders to provide an overview of its dispute resolution process and share insights into frequently handled complaints.

Wrapping up its work for the year, the report shared that during the year, the OAFS launched weekly posts on its Facebook and LinkedIn profiles. This was done to raise awareness of its services, share case summaries, and provide ‘lessons learned’ from the Arbiter’s decisions.

Furthermore, “the office also engaged with the public through regular radio slots in popular programmes aired during prime time.”

‘I am pleased to report progress on these objectives, which remain relevant’

Speaking in the Arbiter’s Report, the Arbiter for Financial Services, Alfred Mifsud, noted that upon his appointment in April 2023 he set the following targets:

1. Shorten the decision time from conclusion of evidence/final submissions to 90 days.
2. Deliver more readable decisions based on substantive narrative rather than legalistic language.
3. Deal with preliminary pleas expeditiously before analysing the merits of complaints.
4. Conduct effective dialogue with regulatory authorities to render them more sensitive to problems at operational level.

Looking back at the past year, he was pleased “to report progress on these objectives, which remain relevant.”

“We strongly believe that in the future, we can, in most cases, shorten the decision time lag from the conclusion of evidence even further to deliver timely justice,” Mr Mifsud continued.

He shared that in the first four months of 2024, 94 new complaints were registered, registering an increase when compared to the 56 cases in the same period of 2023.

He attributed this increase to better media activity, “making the public more aware of the OAFS.”

Many of these complaints are being resolved without adjudication at the post-complaint procedure or mediation stage.

Meanwhile, those that come to adjudication “will be heard and decided with due despatch to make the OAFS more relevant to people’s lives.”

In his concluding remarks, Mr Mifsud said that he is currently involved in intense discussions to widen the scope of its services to certain types of business-to-business complaints related to credit applications.

“We expect to have tangible results to report this year, “he concluded.