The regulation of bank charges in the Maltese legal framework

Abstract

Malta is a “free market” in relation to bank charges since there is no legislation which seeks to impose any fixed rates or caps. The legislation is principally concerned with the right of consumers to be aware of the existence of fees, when the fees may change and those instances where fees may be permissible as opposed to situations where fees may not be imposed. The aim of this dissertation was to look at the regulation of bank charges in the Maltese legal framework and to assess the position of the various stakeholders with special emphasis on the consumer. The EU has been a catalyst in relation to credit transfers, different types of payments and payment instruments as well as consumer credit. This legislation was then implemented in Malta by way of Acts of Parliament, Regulations through Legal Notices as well as Central Bank of Malta Directives. The essential notions of consumer protection and disclosure of information are the centre of the provisions wherever the legislation seeks to regulate bank charges. Transparency, clarity and standardisation are the core principles which underpin consumer protection legislation. Competitive forces affect the imposition and pricing of bank charges. Comparing charges and identifying what constitutes artificially high bank charges are an integral part of this dissertation. This lack of regulation and pricing policy give consumer education a pivotal role in fostering and promoting consumer protection. It was found that banks follow each other when pricing bank charges and that they need to be more competitive through innovation. Malta's small size plays a key role in all this. Therefore, regulatory intervention is needed.