Former PL candidate is financial services arbiter

Former Bank of Valletta chairman and Labour candidate Reno Borg has been appointed as Malta’s first financial services arbiter.

Borg will be tasked with making legally-binding decisions on consumer complaints of financial service products, and will have the power to order up to €250,000 in compensation from financial operators.
Borg served as BOV’s senior legal counsel for eight years and as a member of its board of directors between 1987 and 1992.

He unsuccessfully contested the 1996 general election under the Labour Party ticket, but was appointed BOV chairman following his party’s election to government. Upon the change in government in 1998, Borg was nominated by Labour to serve on the Broadcasting Authority – a position he has retained until very recently.

However, Borg – who has yet to be formally appointed to the role – denied that his political history risks undermining his independence.

“I have been out of the political scene for 20 years now, and I was never accused of political discrimination during my time as BOV chairman,” he told MaltaToday.

He also played down partisanship concerns over his role in the Broadcasting Authority, arguing that BA members are appointed by the President, not by political parties.

“I always acted impartially as a BA member,” he said.

However, Opposition MP Kristy Debono told MaltaToday that Borg's appointment is one "dictated by political patronage which is steadily eroding the credibility of our country's financial and services sector". 

Borg is a qualified arbitrator and has chaired the Malta Engineering Board, the Maltacom Disciplinary Board and the Malta Shipyards Appeals Board in the past.

As financial services arbiter, Borg will earn a salary of €65,000 – equivalent to that of a superior court judge.
He will be assisted in his duties by an administration board composed of Geoffrey Bugeja and Peter Muscat, who were selected by the finance minister; and lawyer Anna Mallia, who was selected by the consumer affairs minister.

As financial services arbiter, Borg may soon have to hear a case against his former employer, with his office a potential way out for 2,300 investors who lost their money in BOV’s La Valette property fund.

It would also allow the Labour Party to keep its pre-electoral promise of full compensation to them.

Reno Borg declined to comment, arguing that he has yet to be formally appointed to the role and that he would not discuss individual cases regardless.

The MFSA fined BOV six times between 2011 and 2012 for misselling the La Valette fund to inexperienced investors. Around 2,300 investors accepted the bank’s compensation offer of 75c per share, on condition that they waive legal action against the bank. After concluding its investigations in 2012, the MFSA ordered BOV to bring the compensation up to €1 per unit: the bank refused, which led the then-Labour

Opposition to pledge that a future PL government would use its power to elect BoV’s chairman to ensure that “serious negotiations” take place between the bank and the investors.

However, its chairman of choice, John Cassar White, warned that granting further compensation would set the bank on a legal collision course with its shareholders.  “We will be exposed under the Companies’ Act to legal action by shareholders who may feel that we are unjustly using their money to settle claims that are not legally due,” he had told MaltaToday.

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