People are right to be angry

MFSA should not handle and investigate consumer complaints anymore. We need a Financial Services Ombudsman to protect consumers.

The handful of persons who run Bank of Valletta should have the humility to put their clients and their bank before their own egos and take the necessary steps to clear up the mess they have created with the La Valette Multi Manager Property Fund.

They should ease the deep pain they have caused to many people. Before they retire or move on to other jobs they must work hard to restore the reputation and performance of the bank.

In the last six years the top management of Bank of Valletta set out to build the success of their bank at the expense of their employees and their clients. Employees were set tough targets and given incentives to sell their products to as many people as possible. Risky products like the La Valette Multi Manager Property Fund were not assessed by the appropriate structures within the bank. The various checks and balances that were meant to be in place to prevent what happened from happening, did not function properly as the structures became incestuous with the same people sitting in different posts and shutting out people who could have stopped the whole thing from happening.

As a result we have pensioners and hard working people who have lost hard earned money. Terminal benefits of former dockyard workers and savings built painstakingly by individuals over a working lifetime have been practically wiped out after the Bank of Valletta persuaded them to invest in funds that were not managed properly and from which vulnerable clients should have been protected.

I know of pensioners who can barely read and write who were made to sign a declaration that they understood the Prospectus of the fund and that they were experienced investors. These pensioners are now being bullied into accepting the meager compensation of 0.75 cents per share. When the fund started collapsing, well connected individuals within the bank withdrew their investment and got between 1.07 and 1.14 euro per share.

It is so sad that in Malta we do not have someone of the moral calibre of Mervyn King, the governor of the Bank of England, who in the last few months has spoken out against banks that exploit “gullible or unsuspecting customers” for short-term profits. Occupying such a top position in Britain’s banking system has not kept him from showing solidarity with the vulnerable people who have been hurt by the unethical and greedy practices of the banks. In Malta, persons who should know better and whose duty is to protect citizens, have tried to prop up the powerful individuals who have caused the pain.

Mervyn King accused the banks of finding it acceptable to routinely rip off clients. Even the economic secretary to the treasury Justine Greenberg had to admit that King’s criticisms of banking were likely to strike a chord with the public: “People will recognize a lot of his comments about regulating the banking industry and in terms of how the banks deal with customers.” King said that the people have the right to be angry with the banks that cheated them out of their money. He said that banks do not care deeply about their customers and have increasingly “taken bets with other people’s money.”

Last Tuesday the Financial Services Authority (FSA) in Britain warned banks and wealth managers to improve the way they advise vulnerable investors after a regulatory survey found that 80 per cent of clients were sold unsuitable products. Many of these products were riskier than the client’s situation asked for. FSA also recommended that customers who suffered harm or were disadvantaged by unsuitable advice should be adequately compensated. FSA is going ahead with new regulation to prevent customer detriment.

Unfortunately the same level of consumer protection does not exist in Malta. The thousands of citizens who have lost their money because of unscrupulous financial advisors and unethical bank practices have lost their trust in the Malta Financial Services Authority (MFSA) because of its ineptitude at doing something really effective about cowboy practices in this area. The MFSA has adequate powers to protect consumers but fails to use them consistently and robustly.

We need some real changes in this area. MFSA should not handle and investigate consumer complaints anymore. We need a Financial Services Ombudsman to protect consumers. A special unit outside MFSA should also be assigned the duty to investigate white collar crime. MFSA should focus on regulating the financial services sector instead of also involving itself in promoting the industry. There should be a code of ethics for MFSA top officials to stop them from hob-nobbing with the persons they are meant to regulate.

And as politicians, if we want to gain the trust and respect of our citizens, we should speak up and defend vulnerable people whenever they are being abused and not let ourselves be co-opted in a network of powerful individuals who do all they can to keep themselves from being held accountable for their actions.

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Min semma' l-BICAL? Try this; http://archive.maltatoday.com.mt/2003/bical.html
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Angry yes and why not? If it was not for a few pepole like Everast Bartolo all this would have been setteled hush hush and the investors would have been left with a begers cant be choosers situation. Yes heads must roll within the BOV and if BOV wants to reclaim its reputation it should pay back in full. Also one should start an investigation re those who had stoped there investment a few days before this whole issue blew out, who are these pepole? how did they know? What sort of inside knoledge did they have? Yes BOV should answer these questions and if not pepole should take action by not trusting BOV again. If it has to be brought on its knees than that's what should be done. We all understand that BOV is part of our stability and that the state is a share holder and the whole banking reputation stands in the equation but its not for the pepole to suffer but for the bank to make ends meet and fork out what is right and just as this is there blunder.
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Prosit Evarist kompli aqbez ghalina ghax hadd ma jrid johrog ghonqu ghalina! Aqraw din: http://bit.ly/m5FbId
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Anthony Haidon
Unless some settlement is reached in a very short time, which can now be measured in hours, all hell will break loose. The MFSA findings are damning and they only cover one third of the way. I can only imagine what shocking reading the remainder of the report would make and this is all about our leading financial institution . Yes the Bank HAS come a long way but I am not sure in which direction and I am not sure where it is going.
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Mark Fenech
Well done Hon. Evarist Bartolo. It is high time we have more representatives from both sides of the house that will be ready to stand up for the sake of the man in the street. And because they do that they will find someone like the Chairman of the BOV who was ready to call Mr. Bartolo - politically colour blind. How on earth Mr. Chalmers who should have already resigned from the job and not telling us that he was going to remain as Chairman of BOV, because he thinks that he is god almighty and without him Malta would stop. I keep remembering what Mr. Chalmers has told us in the past, that we have no case and all was clean on the property fund, until Mr. Bonello os FINCO has shown that the situation was totally to the contrary and the BOV did not act as a proper Custodian of our funds, this besides the conflict of interest that emerged later on when the facts were presented. Now Mr. Chalmers pretends that we just take his words forgranted, for he is the god almighty and only him knows how to handle the situation. We shall keep fighting until what is due to us is made good by BOV and his associates.
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duncan abela
I remember being so annoyed by the constant pestering and phone calls from both our two leading local banks who I felt were abusing of information and my data protection rights (where was or is the local data registrar?) by using the information about my regular deposits bank balance to try to convince me to invest in their hare brained investment schemes which promised the earth in forecasted growth for the gullible. Fortunately I am quite savvy in financial matters and while not being taken in by their schemes I remember writing to the group chief executive of one of the banks strongly protesting and threatening action against the whole group if the local bank continued importuning me. I never got an answer from him but some immediate action must have been taken for the unethical salesmanship stopped immediately besides a changed attitude to my custom. What annoyed me even more was that one of the banks resorted to pester my wife trusting she was perhaps more gulllible. However she had been briefed by me on these classy scams and the amusing thing was when my wife came home laughing that the bank salesgirl after her usual official spiel admitted to her as an aside that even she herself would never invest a sou of her own money in such schemes.
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It would seem that the famous "conscience" of the Head of the MFSA, Andrè Camilleri, only bothers him when it comes to divorce. Otherwise it is very complacent.