The Malta Financial Services Authority (MFSA) on Tuesday (today) called on banks to enhance their consumer service levels based on its recommendations, with some credit institutions already taking proactive steps with the aim of doing so.

This comes after the MFSA recently held a collaborative mystery shopping exercise with the European Banking Authority (EBA), focusing on personal loans and payment accounts, revealing areas for improvement, and highlighting positive practices within the banking sector.

During a total of 50 interactions made in relation to personal loans, it was noted that key information was not being disclosed at the initial enquiry stage. Additionally, costs were sometimes not explained clearly, and shoppers were directed to bank websites instead of receiving immediate answers. The exercise also revealed that 62 per cent of the mystery shoppers were not provided with conditions related to early repayments of loans.

The MFSA noted that a good practice from the credit institutions was that during the interactions, the absolute majority (96 per cent) from the institutions under review did not attempt to increase credit requested by the mystery shopper. This includes through methods such as automatically adding a payable fee, such as a commitment fee, to the amount of the loan.

Additionally, client-facing staff was not actively cross-selling other products offered by the bank, suggesting that banks are avoiding practices that could lead to financial product mis-selling.

In the evaluation of credit institutions offering payment accounts carried out through a separate set of 50 interactions, a limitation was observed in the information provided to clients. Specifically, in only 11 per cent of face-to-face interactions were the mystery shoppers offered details about the full range of payment accounts available, while a significant 75 per cent neglected to discuss optional services associated with these accounts.

Another finding revealed that in onsite visits, 63 per cent of banks did not proactively provide this essential document detailing account fees. Online, these documents were often difficult to locate on websites or provided only upon shopper prompting. Despite this, the exercise showed that the Fee Information Document was generally in the standard format as required by the applicable regulations.

Sarah Pulis, Head of Conduct Supervision at the MFSA, stated that the exercise “aimed to ensure that institutions comply with regulatory requirements and prioritise consumer protection.”

Sarah Pulis / MFSA
MFSA Head of Conduct Supervision Sarah Pulis / MFSA

“While certain positive practices were observed, the findings highlight areas where institutions need to improve. Information on costs and rights should be readily available and presented clearly to consumers, across all channels, as early as at enquiry stage. The MFSA also expects bank staff to be regularly trained on product knowledge, professional conduct, and accurate information provision,” she added.

She continued by stating: “In our interaction with these institutions after the study, we have noticed a significant commitment by banks to work on these areas for enhancement for the benefit of consumers.”

Christopher P. Buttigieg, Chief Officer Supervision added: “Ensuring that the interests of consumers are properly safeguarded is one of the MFSA’s primary objectives.”

Christopher Buttigieg / MFSA
MFSA Chief Officer Supervision Christopher P. Buttigieg / MFSA

“Our supervision also focuses on the business conduct of financial service entities, to make sure they always act in the best interest of consumers. This mystery shopping exercise continues to underline the importance that we give to consumer protection,” he affirmed.

The MFSA also proceeded to encourage credit institutions to thoroughly review the full EBA report, accessible here. This has also been highlighted in a recently issued “Dear CEO” letter, also available on the MFSA’s website here.

“The authority remains steadfast in its engagement with banks, working collaboratively to address observations and promote continued compliance with regulations,” the MFSA confirmed.


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