Investor protection in financial services : legal remedies available to investors with an analysis of local case law and ongoing claims

Abstract

Financial Services is undoubtedly a pivotal sector in many EU countries. Throughout the years Malta has been experiencing a drastic increase in investments in the financial services industry. While this is a welcomed investment, one cannot fail to forget the other party to the transaction of a service of this kind – the investor. Investor protection has always been a top priority for Malta and EU Member States. This is seen in light of different statements issued by the EU institutions and Member States reiterating their dedication to protecting investors of financial services, most of all the vulnerable members in such transactions who may lack the expertise and knowledge associated with particular investments as opposed to other professional and experienced investors. The latter are still afforded protection, however there is a bigger emphasis on protection for the more vulnerable investor. The 2008 Financial Crisis together with local case law, including the All Invest Company Ltd regulatory breaches and the La Valette Multi-Manager Property Fund case, highlighted the lacunae in our law relating to investor protection. The increased developments and sophistication of different financial services creates an ever-growing need for more effective, efficient, and flexible remedies to be put in place for the protection of investors with the proper availability of an expedient legal remedy to tackle grievances. It is in this light that the term paper analyses the regulatory body in Malta while briefly defines the terms associated with investor protection. The legal remedies available locally for investors to bring forward claims and disputes are tackled with particular emphasis on the out-of-court settlement approach. A brief analysis of major local case law handled by the Tribunal and the administrative actions taken by the Authority shall lead to the discussion on the introduction of the new Office of the Arbiter for Financial Services.