This blog is written by Benny Borg Bonello.
Why BBB84? BBB is much shorter than my name and 84 to point the importance of George Orwell's 1984 which I consider the most important book at this time and age.
Dan l-ahhar l-MFSA permezz ta’ stqarrija mahruga mit-Taqsima ghall-Ilment tal-Konsumatur harget twissija lil dawk li setghu kienu interessati f-investimenti ‘Asset-backed Securities.
L-ghan ta’ din l-istqarrija kien li twissi lil dawk li kienu imhajra li dan hu investiment ghal dawk li huma profesjonisti u li ghandhom esperjenza.Din l-istqarrija tidher li qajmet kjass ghal dawk li kienu qed imexxu dan it-tip ta’ nvestiment ghaliex gabu reklam ta’ pagna fil-gurnal tieghek biex jiprova jirribatti din l-istqarrija.
Jien qbajt skantat b’din ir-reazzjoni ghaliex din kienet stqarrija f’posta.Kienet qed twissi biex min jidhol ghal dan l-investiment ikun jaf ghal x’hiex qed jidhol.Ir-reklam li gabu l-istess nies li qed imexxu dan l-investiment juri l-htiega ta’ din it-twissija.Min qara r-reklam ta’ min qed imexxi l-investiment u ma fehemx kif jahdem dan l-investiment, m’ghandux jidhol ghalih.Min fehem ghandu joqghod attent ghal punti li qajmet l-istqarrija.
Nemmen li m’hemm hadd li ghandu esperjenza f’dawn l-affarijiet u fl-istess hin m’ghandux interessi personali bhal l-MFSA.Fost ohrajn nirrakomanda hafna pubblikazzjoni importanti hafna li harget l-MFSA ghal dawk li jinvestu fi prodotti finanzjarji – Gwida ghall-konsumatur meta jinvesti fi Prodotti Finanzjarji. L-esperjenzi qarsa li ghaddew hafna li nvestew dawn l-ahhar snin, juri l-bzonn ta’ aktar informazzjoni.
B’hekk biss nistghu nergghu inqajmu l-fiducja ta’ hafna li harqu subajhom dan l-ahhar biex jergghu jibdew jinvestu. Bhal din l-istqarrija ghandna bzonn aktar u mhux anqas.U ghandna bzonnom bhal l-ilma fid-desert.
During the years, bank charges have been one issue that both business and local consumers have had to endure. It was very unfortunate that when the banking market started to open up in Malta the first thing that increased were not the benefits to consumers, but the charges. The prime mover was HSBC but this was soon followed by Bank of Valletta and later APS. Thus, the result was an escalation of bank profits and higher charges for consumers.
Mind you, this is not a local phenomenon, though in a small market the impact is much greater. The EU is very much concerned about this aspect since this phenomenon is creating a very uneven market within the Single Market. One result of such concern was the setting up of the Consumer Markets Scoreboard which tries to monitor market signals across the EU. This is becoming a very important policy tool and there are plans that this will be expanded over the years.
The latest Consumer Markets Scoreboard confirmed that there were three different retail financial services issues where consumers experience difficulties:
Pre-contractual information;
Some services are opaque in structure; and,
Switching of bank accounts.
In this article I want to take a closer look at the first factor, using as an example the third factor as there have been some recent developments.
One essential feature of a market economy is that consumers would be able to get the best deal available. At times this would require switching of bank accounts. This seems to be a simplistic operation but in practice it is not that simplistic, and often quite complicated and frustrating.
The EU is taking this matter quite seriously. In fact, one of the measures is that of simplifying the transfer of current accounts between different banks. Theoretically, this should not be complicated but in reality it seems that even transferring accounts from one branch to another within the same bank seems to be shrouded in mystery. Recently, someone wrote to a local newspaper pointing this out:
Does this also apply to switching accounts from one branch to another of the same bank, because from my experience this also was a harrowing ordeal?!
Such experiences should now be a thing of the past. However, there is one precondition. The consumers should know about their rights. From the initial statement that was issued by the Malta Bankers’ Association which is a local agency responsible for introducing these measures, the Principles are available at the branches of the most popular banks in Malta.
But what is the availability of such information? What type of information is being given to consumers?
I personally visited a branch of each of the three largest banks - HSBC, Bank of Valletta and APS. In none of these branches was the information readily available in the form of a leaflet. Thus, I had to ask specifically for the information. At first glance this should not be a problem. But if there is a queue of people waiting to be served, this suddenly becomes a problem and the information cannot be said to be readily available to the consumer before the transaction takes place. In two of the branches I visited, it took more than 20 minutes to obtain the information.
At the APS branch, the person behind the counter found it difficult to understand what I wanted. It was after the intervention of a higher official that he understood what I required. After all this effort, all I got was the initial statement printed in the local press.
With regard to HSBC and the Bank of Valletta, at least the person behind the counter understood what I wanted and obtained the document after waiting for it to be printed. Mind you, in both cases, though I specifically asked for the information, both clerks at first thought that I wanted to switch my current account and were going to start the process before I was given the information.
BOV gave me the full document which includes the Principles and other information. The document given was full of technical jargon. I had to go through it to find the new facilitating process that was being proposed to switch current accounts. Instead of an information document, consumers are being presented with a legal document. Moreover, in all cases the documents received were in English.
The document I received from HSBC was much shorter as it included only the three steps required, together with sample letters. This formed only one annex of the original document. Though shorter, it was direct and to the point and quite easy to follow. I was also given the latest schedule of bank charges.
Three points emerged from this exercise. First, Maltese consumers are not conscious of such developments. Even though there was a press statement, this was not enough to make consumers conscious. The staff at one of the banks had to request their marketing section to help them search for the document on their website as I was the only person who asked for such a document.
Second, as already described above, the information is not quite available. Thirdly, though the information was prepared at one source (the Malta Bankers’ Association) I ended up with three different versions of the same document. I would expect that such information be standard.
I sincerely hope that this was the initial phase and that a leaflet in simple language explaining how the consumer should go about the process of switching current accounts would be produced and be readily available.
Unless this is done, the local banks will succeed in making a mockery of a good EU requirement. Unfortunately, this would not be the only time that they succeed in producing a legal document covering their ass and mystifying a process that should be beneficial to the local consumer. They have already done it with MIFID and the Consumer Credit requirements. Let us hope they will not do it again.
Ricentament thabbar li l-Gvern se jahsibha biex jerga’ jcaqlaq ’il fuq it-tariffi tad-dawl u l-ilma. Miniex se nidhol fuq l-effetti li mziura bhal din se jkollha sew fuq is-setturi industrijali u kummercjali u sew anke fuq il-familji. Izda se nerga’ ndur fuq ir-regolatur – l-Awtorita’ ta’ Malta dwar ir-Rizorsi (MRA).
Fi Frar ta’ din is-sena, din l-Awtorita’ wara baraxx ta’ kritika kienet nediet konsultazzjoni pubblika dwar il-principji li għandhom jintuzaw biex jigu determinati t-tariffi tal-elettriku.
F’Mejju rega’ kien hemm revizjoni u l-MRA fir-rapport tagħha, minghajr ma ghamlet l-ebda referenza ghall-konsultazzjoni pubblika, tidher li accettat il-metodu li thaddem l-Enemalta, metodu li jirrifletti l-pozizzjoni tal-Enemalta bhala monopolju. Ghalhekk il-prezzijiet ma jirriflettux il-prezzijiet li seta’ kellna li kieku kellna suq aktar miftuh.
Dan jitfa’ fuq il-konsumaturi l-inefficjenzi ta’ min imexxi din il-korporazzjoni. Aktar minn hekk, dan il-metodu jkompli jinkoraggixxi li l-inefficjenzi jkomplu ghaddejjin u jhallas ghalihom il-konsumatur.
Ftit taz-zmien ilu, din l-Awtorita’ kellha tibdil fit-tmexxija. Ghalhekk qed nistennew li issa l-Awtorita tohrog rapport tal-konsultazzjoni li saret u tghid liema proposti laqghet u ghaliex. Fuq kollox l-Awtorita’ ghandha tispjega kif il-proposti li laqghet iharsu lill-konsumaturi u kif qeghdin iwasslu biex ikollna Enemalta aktar efficjenti.
On my last visit to Valletta, at the Bus Terminus, I was struck by the amount of HSBC adverts on buses. Just a small deviation - though I find nothing objectionable re adverts on buses, I do object to adverts on the back for two reasons. First, it reduces the driver’s visibility of the traffic behind the bus and secondly, the graphics or message may catch the attention of the driver behind the bus to such an extent that the risk of a collision is greatly increased. I hope that the Public Transport Authority will consider these facts.
Most of these adverts focused on investment products. I mentioned HSBC as their adverts on buses dominated the scene. However, there are similar campaigns on other media by other banks.
These campaigns are understandable taking into consideration the recent turmoil in the financial markets. I found it very striking as the local media practically disregarded this fact – the effect of this turmoil on individual consumer. We have heard that our banking system and the economy weren’t much affected by the global financial turmoil. It was a relief that the local big cats (the banks) didn’t get burnt as the repercussions would have been much greater. The only benefit of this turmoil was that the government finally approved the amendments to the Deposit Compensation Scheme regulations which increased the cover to €100,000 per individual. Needless to say, most of the burden was again passed on to the taxpayer as our big cats succeeded in shifting most of their responsibilities.
But there was one question that was randomly asked and to my knowledge never answered: Is our system so much insulated and isolated from the global system? If it is, we’re not only missing the risks and difficulties of the last turmoil but we also missed the benefits during growth periods which had lasted for years.
The second question is how our consumers, who during the last few years invested their savings, fared. This point practically has been totally absent from the media comments. In my opinion this is a serious omission by our media. This is not the first time that this happened. Another occasion that comes to mind was when the Argentina crisis hit the Maltese investors. Even then the most conspicuous thing in the comments of the local financial commentators was the absence of discussion on the extent that the small local investor was affected. It is a pity that the effect of the last financial debacle on the local small investor had to face the same fate.
Another point that amazed me was that even the small investors themselves barely voiced their dismay, concern and anger. It was only the very rare exception that one would read comments such as
Some three years ago we made an investment thro HSBC (Malta), since then our money, in this investment, has been melting like ice. To add insult to injury we received a notice that our bank charges are to be increased. The trouble is that we do not like to withdraw the investment which now is worth just over half of we invested. What shall we do?? (Times of Malta, 1st October 2009)
I’m sure that such comments are not restricted only to investments made through HSBC. They apply also to investments made through other banks and other licensed financial institutions or brokers. I’m also sure that there are many who share the above experience.
But if this is so, why have very few people voiced their experience. I notice that many of my friends are silent on this subject but you can sense that they are uncomfortable about it. Recently a friend of mine gave me an indication. While we were talking about this subject, he asked me a question: how will you break such news to your wife or husband? He opined, and I tend to share such an opinion, that in many instances, decisions regarding investment decisions of a couple are usually taken by one of them. Consequently, if the couple’s savings have been invested in some financial product which has resulted in negative returns i.e. the investment is lower than the sum invested, it is very difficult to inform the other partner that their life’s savings are in jeopardy. This is especially so if the couple is nearing retirement or are in retirement.
There may be other reasons for this lack of openness by individual consumers. Two that come to mind are that no one would like to tell others that his investment acumen simply failed and secondly, that there are others who are still expecting their positive results in spite of the recent turmoil in financial markets. The last class I mentioned have continued their periodic investment with no appreciable change in their behaviour and thus do not have a negative impact on the economy.
But my concern is for the impact the others have. Recently, I was invited to attend a meeting regarding pension funds. We listened to the representative trying to sell us a group pension scheme. There was very little interest. One could sense this through the very limited number of questions asked. However, after the meeting the general feeling was very apparent. None wanted to have to do with such schemes. One could easily get hints that their experience after investing in the products offered locally was far from good. Mind you these are highly professional people (not in the financial area). They form part of the upper middle class, and succeed in saving part of their income. Most probably they were the main small investors.
My concern is simply that we cannot just let this cohort leave the financial markets and ‘invest’ in other things which might prove to be more speculative as if nothing has happened. If we’re not to lose this group there are some serious questions to be asked. Can anybody try to assess the impact that the recent financial turmoil had on the individual investors, especially those who are on the verge of retiring? If there were losses, how extensive were these? Were the financial instruments which were sold to these consumers appropriate to them? If not, do we have a lacuna in our regulatory structure or was it lack of supervision? Did those institutions who were providing these financial instruments take any action to ensure that their advice in future is more sound? Did they feel the need to change their managers who were responsible for such investments?
There need to be answers to these questions. Apart from this, the plea for help from the above-mentioned consumer cannot simply be disregarded. He represents the silent majority. I am sure that only straight answers and transparency will help this cohort to reconsider their position and start trusting the financial system again, this time more carefully.
Recently I had the occasion of using the public transport.I always had mixed feelings about this system.It was (not anymore!) a cheap system of transport which used to take you to most parts of the Island.It was and still is unreliable.Yet the other side of the coin is that it was an adventure – as you never really can forecast what is going to happen – and it provided a source of information – it tells you the real agenda (not the one manipulated by editors and other controllers of the media) of the people.
The first surprise was a positive one.I boarded a bus, impeccably clean, where the driver closed the doors of the bus during the journey and provided an air- conditioned bus.The driver of bus number DBY-452 should be commended.I’m identifying the driver as just as I believe in name and shame so do I believe that those outstanding should be commended.
The second surprise is that, in spite of the bla bla that we frequently hear, all other things remained the same.The Valletta terminus is still a shambles reminding one of a Middle East suk and the organisation is still the weakest point.
Four things stand out.These surprise you and hit you in the face.First, after so many plans and press conferences, it is still a dirty area and stinks.Second, that people are still made to alight the buses in mid-street.Thirdly, drivers park wherever they like with the consequence of creating traffic blocks.I had to board my bus in the middle of one of the parking channels as someone just left his bus in the place where our bus was supposed to park.Our bus in turn blocked the channel to all the traffic.
The last point is the management, or rather the absence of management, of the system.When I arrived 7 minutes before my bus was scheduled to leave the Valletta terminus, the bus was still not there.I went to the ‘Dispatcher’s office’ to enquire.The words are in brackets as one needs to use his utmost imagination to describe this shambles as office.I had to interrupt a conversation to get any attention.I was directed to the side of the ‘office’ where a bunch of drivers sitting on plastic soft drinks’ cases were discussing some hot topic.It took an effort to distinguish the dispatcher.The only answer I got was that the bus will materialise.
Two things to note:Consumers are not only paying much higher prices than previous but are paying higher sums of money through taxation to maintain the ADT and higher subsidies.Consumers were made to pay higher prices on the pretext that the system will improve.Very little, if anything has improved, and one could easily say that the last ‘reform’ failed miserably to the consternation of consumers who had again to pay for this failure.The whole system is still dictated by the owners and not by ADT.
Prospects for the future:We’re going to end up with another monopoly.Moreover, unless we start to organise today, the prospects are that even if the equipment were to be completely replaced with more a modern and suitable one, the same systems will persist just like it happened at Mater Dei!
Nirreferi għall-ittra ta’ Michael bit-titlu ‘TUC u Għaqda tal-Konsumaturi’ li dehret fil-ħarġa tal-Ħadd 12 ta’ Lulju. F’din l-ittra hemm tliet punti li huma magħqudin flimkien. L-ewwel hemm l-idea ta’ TUC.
Jien wieħed minn dawk li nemmen li għandna bżonn TUC - għaqda bejn il-unions f’pajjiżna. Hemm ħafna raġunijiet għal dan. Biss nemmen ukoll li għall-futur qrib dan mhux possibbli peress li ċerti mexxejja ta’ unions diġà ddikjaraw pubblikament li ma jemmnux f’din l-idea. Hi sfortuna, iżda, dik hi l-verità.
It-tieni idea magħquda mal-ewwel waħda hi li TUC għandha tifforma għaqda tal-konsumaturi. M’hemm xejn ħażin f’idea bħal din għax għaqda bħal din ikollha r-riżorsi u l-motivazzjoni li tħares l-interessi tal-konsumaturi. Il-unions għandhom interess li dak li jiksbu permezz ta’ ftehim kollettiv, ma jintilifx permezz tal-għoli tal-ħajja. Barra minn hekk, jekk wieħed iħares lejn ċerti għaqdiet tal-konsumaturi f’pajjiżi Ewropej isib li dawn żviluppaw mill-unions u li dawn jaħdmu mill-qrib.
Iżda anki din mhix possibbli. Għaqda bħal din ma tkunx rikonoxxuta fl-Unjoni Ewropea u lanqas fil-Consumers’ International. Dan għax hi ta’ importanza kbira li Għaqda tal-Konsumaturi ma tkunx affiljata mal-unions. Ir-raġuni hi sempliċi. Għaqda bħal din jista’ ma jkollhiex indipendenza f’ċerti setturi li union ikollha interess speċjali.
Hemm it-tielet punt – dak li r-regolaturi jaħdmu sew. Nemmen li llum dan hu l-fulkrum biex f’Malta jkollna ħarsien sew għall-konsumaturi. Illum kulħadd jammetti li parti mill-għoli tal-ħajja ġej minħabba li m’għandniex kompetizzjoni jew m’għandniex biżżejjed. Anki f’dawk l-oqsma bħal komunikazzjoni bit-telefon fejn hemm kompetizzjoni, xorta m’għandniex biżżejjed għaliex il-prezzijiet tagħna huma xorta mill-ogħla fl-Ewropa.
Jekk fejn jidher li għandna kompetizzjoni, xorta għadna lura, aħseb u ara fejn m’hemmx. Dan ġej minħabba li, bħalma qal Michael, ir-Regolaturi f’Malta fallew. Hemm diversi raġunijiet għal dan. Fost dawn insibu li dawn ir-Regolaturi ma tantx jistgħu jkunu indipendenti.
L-ewwel għandek il-liġijiet li waqqfuhom li jxekklu l-indipendenza tagħhom. It-tieni, ir-rwol mogħtija lil xi wħud hi waħda mħawda. It-tielet, għalkemm dawn ir-Regolaturi għandhom nies kapaċi, xorta ma jistgħux iħarsu l-interess tal-konsumaturi għax id-direzzjoni li jirċievu hi żbaljata u indirizzata biex taqdi l-gvern u mhux l-interessi tal-konsumaturi.
Dan għax min imexxi qed jintgħażel mhux minħabba l-kapaċità, il-ħeġġa u l-istamina li jħares l-interessi tal-konsumaturi, iżda minħabba l-kuluri. Ir-raba’ raġuni għaliex mhux qiegħdin jaħdmu tajjeb, għax dawn mhux kontabbli.
Minħabba f’hekk il-konsumaturi Maltin qiegħdin jaqilgħuha darbtejn. L-ewwel darba minħabba l-għoli tal-ħajja u nuqqas ta’ livelli u t-tieni minħabba t-taxxi żejda li qed ikollhom iħallsu għar-Regolaturi li ma jiswewx karlin.
Some weeks ago we had a power-cut.It was a long power-cut but one which was easily dismissed as something for which there could be no guarantee that it will not happen again.Enemalta’s Chairman also dismissed the idea that Enemalta should pay any compensation.
In the majority, the press reviews stopped there.The matter seemed to have been nothing out of the ordinary and the discussion stopped there.If it had not been for the MEP Professor Scicluna who had tried to quantify the damage to the economy, we would probably have only read a small paragraph about it, unless somebody didn’t try to label the whole thing as sabotage!
For me there was something amiss.The Malta Resource Authority (MRA) was conspicuous by its absence and silence.I was surprised for two reasons that the regulator in this area kept silent.First, it is its responsibility to ensure that the provider supplies a continuous service.Second, it is its responsibility to ensure that the Enemalta Corporation compensates the consumer.
Let’s consider the first responsibility.In this time and age it is simply not on that a country goes through a complete blackout for several hours.It is MRA’s responsibility to set standards.Several years ago, when I was leading the Consumers’ Association, I wrote to the Chairman of MRA asking if the Authority had set up any standards re power cuts.Needless to say, the MRA never answered, in spite of several reminders.To date I cannot find any reference of any standards set in this area.
The MRA should immediately set standards as this is basic.Once these standards are set, the provider is then bound to meet those standards.If these are not met, then those running Enemalta should be responsible. The argument then crops up.If Enemalta is to pay up, aren’t the consumers themselves who will be paying for the lack of management?At first glance and as things stand, yes.But is that the way it should be?
If people are accountable, the matter should take a different turn.If the people who are running Enemalta, its management and the Board of Directors become accountable then they should pay for their inefficiencies.We, consumers, are paying them good money to run the Corporation efficiently.If they are inefficient they should pay for their inefficiency.
There seems to be two versions, though not necessarily conflicting, for the power-cut, if one dismisses the "series of coincidences" harboured by the Prime Minister.
The first version is that put forward by the Chairman of Enemalta who gave a detailed technical explanation the day after the power-cut. He is reported to have said that a boiler at the Marsa power station tripped in the morning, having a domino effect on the remaining boilers that could not take the added load. The situation was exasperated by the fact that two boilers were undergoing a scheduled overhaul and another two had been subject to maintenance.
If one adheres to this version, a number of questions arise.Who took the decision to overhaul and maintain four boilers at the same time?I am sure that such a decision is not taken lightly and that the top management was aware.If this is so, who is going to assume the responsibility?
There is however, another version.In spite that it was known to management that the capacity of the present system could not meet the increasing demand, no new investment was made.Who is going to carry this responsibility?If the present management and Board of Directors found such a situation, are the previous ones going to assume the responsibility of the present situation?Who is going to pay for these inefficiencies?
And this brings us to the second point.The fact that the Enemalta’s Chairman dismissed any compensation does not mean that nothing can be done.Those who suffered damages can sue Enemalta.
But should we take this approach?Litigation is both expensive and lengthy.Thus it works in favour of those economically strong – in this case Enemalta.Surely if we adopt this approach, the consumer will come out the loser.
What about the Malta Resource Authority?Why can’t it facilitate matters by investigating each payment request and then decide whether compensation should be paid or not?Why can’t it take its responsibilities more seriously? Why does it need to be evident through its inactivity?
The MRA also needs to explain another matter which arose just before the June European Parliament elections.It was reported that Minister Gatt was having second thoughts about his decision to introduce the high utility rates last October.But what about the MRA, which finally approved these rates?Is it still maintaining that it took the right stand when it approved the rates proposed by Government?
In order to justify its position, it commissioned an accounting report.Does it still maintain that this report was valid?And if it still maintains that, can it inform us on what basis it accepted the new rates which became applicable since April?Did it base its calculations on the same principles as on the previous occasion?Why did it not publish a report to show the basis for the rates applicable in April?
Could it be that even on this occasion the MRA just followed the Government who found it expedient to reduce the tariffs at that time?And if it did that, was it acting as a Regulator should?
The Regulatory system was set up to ensure that the consumers would absorb the benefits of the market system.As most of our Regulators are failing in their responsibility, the consumer is finding itself in a worse situation – it is paying higher prices on the market and paying for useless Regulators.It is high time that we tackle this problem
In fact this is something that the new MEPs should take up while in Brussels.I believe that it is high time that DG Competition should take a deep look at our regulatory system.This is especially needed as there is no local political will to ensure that the regulators are truly independent both of the Government and the producers, and act in the interests of both competition and the consumer.
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