Issue link: https://maltatoday.uberflip.com/i/1481025
5 NEWS 6.10.2022 In the three years preceding the COVID-19 pandemic, Malta recorded a current account surplus averaging 5.5 per cent of GDP, underlined by a strong service net export balance. However, the COVID-19 pandemic negatively impacted the current account balance leading to a current account deficit in 2020 and 2021. During the first quarter of 2022, Malta has similarly recorded a current account deficit, although this has decreased significantly from the previous quarter by 4.1 percentage points. percentage of trade in goods THE household saving rate in the euro area was at 13.7% in the sec- ond quarter of 2022 (compared with 15.2% in the first quarter of 2022). ese data come from a first re- lease of seasonally adjusted quar- terly European sector accounts from Eurostat, the statistical office of the European Union. At the same time, the household investment rate in the euro area re- mained nearly stable at 10.1% in the second quarter of 2022. In the second quarter of 2022, the profit share of businesses (non-fi- nancial corporations) decreased slightly from 40.0% to 39.8% in the euro area. e business investment rate in the euro area remained stable at 23.9% in the second quarter of 2022. e peaks of the business in- vestment rate observed in 2015Q2, 2017Q2, 2019Q2, 2019Q4 and 2020Q1 are related to large imports of intellectual property products reflecting globalisation effects. Households e decrease of households' sav- ing rate in the euro area is explained by consumption increasing by 3.5%, at a faster rate than households' gross disposable income (+1.7%). Household's investment rate re- mained nearly stable in the euro area due to the growth of gross fixed capital formation and gross disposable income, by +1.1% and +1.7%, respectively. Non-financial corporations e slight decrease of business profit share in the euro area is ex- plained by the increase of business gross value added at a slower rate (+2.0%) than compensation of em- ployees (wages and social contribu- tions) plus taxes less subsidies on production (+2.4%). Business investment rate re- mained stable in the euro area as the growth rates of business gross fixed capital formation and gross value added were similar (+2.2% and +2.0% respectively). Household saving rate down to 13.7% in the euro area THE Office of the Arbiter for Financial Services published its Annual Report and audited Financial Statements for 2021 which was tabled in Parliament by the Minister for Finance and Employ- ment Clyde Caruana on Monday. e Annual Report provides a com- prehensive overview of the operations of the Office of the Arbiter for Financial Services for the year and includes the summary of a selection of over 30 de- cisions delivered by the Arbiter during the year. During 2021, 167 new formal com- plaints were registered, which is higher than the number of complaints regis- tered in each of the previous two years and surpasses the average of formal complaints processed between 2016 and 2020. Just under 70% of formal complaints received were lodged online through the OAFS' new portal which went live at the beginning of the report- ing year. 54% of complaints (90) were submitted by non-residents, compared to 46% (77) from Maltese residents. During the year, the Arbiter deliv- ered 82 final decisions of which only 19 (23%) were appealed, with the remain- ing 63 cases becoming final and bind- ing on the parties. e summaries to more than 30 decisions of the Arbiter in the annual report provide a broad spectrum of cases relating to banking, investments, insurance and pension complaints. e Arbiter's decisions are available on the OAFS' website in their entirety, except for the complainant's name which is pseudonymised. Particularly significant are the num- ber of decisions delivered during the year relating to private retirement schemes. Such cases are submitted by expatriates residing in different ju- risdictions who would have bought a private pension scheme offered by a service provider authorised in Malta. Indeed, one such final decision col- lectively comprised 60 complainants as the merits of their case was intrin- sically similar in nature. In several of these decisions, the Arbiter found that the service provider, acting in its dual role of retirement scheme administrator and trustee of the scheme, did not act in the best in- terests of the scheme members and did not perform its duties diligently as required by the applicable legisla- tion and the service provider's own guidelines. e Arbiter's decisions were also confirmed on appeal. e Arbiter observed that: "e outcome of these decisions was also mentioned in international media and it was quoted as part of a call for ev- idence on protecting pension savers submitted before the Work and Pen- sions Select Committee of the House of Commons in the UK. It was also cited in a UK voluntary code of best practice issued by the Pension Scams Indus- try Group (PSIG) to administrators of registered pension schemes. is high- lights even more the sensitive nature of the work undertaken by the Office and other alternative redress bodies." In his report, the Arbiter also touched upon a number of issues relating to as- pects which the OAFS comes frequent- ly across when dealing with customer enquiries and complaints. For instance, in the context of anti-money laundering and counter terrorism financing legisla- tion, he observed that whilst banks are obliged to carry out ongoing due dili- gence of their clients, retail clients with small accounts, whose transactions are easily traceable, should not carry the burden of unnecessary bureaucracy. "Such precautionary measures should be implemented only where they are truly needed, especially in dealing with professional money launderers", the Arbiter said. e Arbiter also called for financial services providers to provide short and simple contracts that consumers are able to understand. e Arbiter noted that: "very often clients are re- quired to sign lengthy consumer con- tracts which are highly technical and which the average consumer cannot understand. is practice only serves to create 'onerous contracts' which run counter to the provisions of the Consumer Affairs Act, and which have been criticised even by the Maltese Courts. is practice should change because it is both illegal and unfair." e Arbiter also made observations regarding several enquires and com- plaints relating to different scams that were reported to the OAFS by con- sumers involving payments to online investment platforms or payments by bank transfer for services or products which remain undelivered. e Arbiter called on stakeholders to embark on an effective and ongoing financial educa- tion campaign to help consumers not to fall for such scams. e Annual Report, which includes the audited financial statements of the OAFS as at 31 December 2021, may be downloaded from www.financialarbi- ter.org.mt. 167 complaints registered with financial services arbiter in 2021 ANNUAL REPORT 2021