Following a recent collaborative “mystery shopping” exercise between the Malta Financial Services Authority (MFSA) and the European Banking Authority (EBA), several credit institutions have “proactively taken steps to enhance consumer service levels based on the Authority’s recommendations.”
The evaluation focused 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 inquiry stage.”
Additionally, costs were sometimes “not explained clearly, and shoppers were directed to bank websites instead of receiving immediate answers.”
It was also noted that 62% of the mystery shoppers were “not provided with conditions related to early repayments of loans.”
A good practice that was “identified during the interactions was that the absolute majority (96%) of the credit institutions under review did not attempt to increase credit requested by the mystery shopper – by for example, automatically adding a payable fee, such as a commitment fee, to the amount of the loan.”
Moreover, it has emerged that client-facing staff was “not actively cross-selling other products offered by the bank, which suggests 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% of face-to-face interactions “were the mystery shoppers offered details about the full range of payment accounts available, while a significant 75% neglected to discuss optional services associated with these accounts.”
Another finding revealed that “in onsite visits 63% of credit institutions 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. Nevertheless, the exercise has shown 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, said they expect bank staff to be regularly trained on product knowledge.
Christopher Buttigieg, Chief Officer of Supervision, said their supervision aims to make certain that businesses act in the best interest of consumers.
The MFSA encouraged credit institutions to thoroughly review the full EBA Report in a recently issued “Dear CEO” letter, which is also “available on the MFSA’s website.”
The Authority remains steadfast in its engagement “with banks, working collaboratively to address observations and promote continued compliance with regulations.”