Establishment of a financial arbiter as a means of redress for financial services consumers : a legal analysis

Abstract

The local out-of-court redress landscape is one which is somewhat underdeveloped, particularly in consumer related sectors where redress vulnerabilities are prevalent. This is manifestly visible in the financial services field where until recently strong and effective redress entities were hard to come by. The creation of the Office of the Arbiter for Financial Services, supported by Directive 2013/11/EU on Consumer ADR, should therefore provide much needed relief to the local consumer. Being empowered with both a prospective and a limited retrospective competence, the Arbiter is targeted at providing wide scale redress to a plethora of aggrieved consumers. In so doing, the Arbiter shall be empowered with the capacity to issue executive binding decisions on complaints submitted to it, obliging respondent service providers to effect specific performance or provide financial compensation to consumers in line with the Arbiter’s determination. Nevertheless, the potential award is not the sole element on which the quality of a redress entity is adjudged. Indeed, the structural framework of the adjudicative entity, the basis on which it formulates its decisions as well as the width of its competence are some of the other issues which merit consideration. Furthermore, in light of the fact that the Arbiter shall essentially be determining civil rights and obligations, certain procedural safeguards pertaining to fair trial notions are inevitably brought into play, some of which are in constant tension with the Office’s overarching purpose of providing timely redress.