The protection of the financial services consumer under financial services and consumer legislation

Abstract

In this thesis I have examined and analysed the various financial services legislation under Maltese law, together with other consumer affairs legislation that is of a general nature but that equally affords protection to the consumer of financial services. With respect to general consumer affairs legislation, I am referring primarily to the Consumer Affairs Act, the Doorstep Contracts Act and the Competition Act. The aim of this thesis has been mainly that of identifying the areas of consumer protection under the said legislation and to verify whether the consumer of financial services is being afforded enough protection. Financial services legislation is quite a technical branch of law. As a result, the financial services consumer may be too vulnerable vis-a-vis the financial services provider. This vulnerability may arise through a number of factors, such as a lack of proper know ledge, inadequate information, misleading advertising and unfair trading practices. However, I contend that the Maltese financial services legal regime, coupled with the other general consumer affairs legislation, contains adequate and satisfactory safeguards in the field of consumer protection. It is certainly not the aim of this thesis to compare and contrast the Maltese financial services legislation with foreign or European Union legislation. Rather, the aim of the thesis has been to analyse whether Maltese financial services legislation affords adequate and satisfactory protection to the consumer of financial services. This thesis has been approached through the examination and analysis of the main financial services legislation, such as the Banking Act, the Central Bank of Malta Act, the Financial Institutions Act, the Financial Markets Act, the Investment Services Act, the Insurance Business Act, the Insurance Brokers and Other Intermediaries Act, the Malta Financial Services Act, the Special Funds (Regulation) Act, the Set-off and Netting on Insolvency Act and other related legislation. The main areas of consumer protection that have been identified to justify and buttress the main arguments of this thesis were the following: the obligations and conditions which are tied to the grant of a licence, the disclosure of information, the publicity and confidentiality that are expected by licence holders, the regulation of financial services advertising, compensation schemes and the role of the regulator as the guardian of the sector. Other general safeguards have been identified in the Consumer Affairs Act. Certain other areas of consumer protection have been explored in the field of trading practices, namely the doorstep selling, distance selling and other trading techniques that are in some cases specific to each financial services sector. Finally, I have visited the issue of out-of-court redress and access tcrjustice, in particular the roles of the consumer complaints manager, the Consumer Claims Tribunal and the Financial Services Tribunal.