MFSA improves communication with shuttered bank’s concerned depositors

MFSA

A complaint with the Ombudsman led the Malta Financial Services Authority to change a policy which meant that account holders of banks whose banking licence was withdrawn were being kept in the dark about what was happening.

The complainant held an account with Nemea Bank, whose banking licence was withdrawn by the European Central Bank on March 2017. PwC were appointed as the competent person, and they had last sent depositors an update on October 2018, in which they maintained that the financial position of the bank remained precarious. Additionally, they said that any further disbursements to depositors would likely be made by the bank’s liquidator.

However, this liquidator was yet to be appointed – legal proceedings have stalled the process – and the complainant sought clarifications from the MFSA which were not forthcoming. He ultimately complained to the Ombudsman on July 2019, seeking action so that he and fellow depositors would receive constant updates on what was happening.

Authority fully cooperates with Ombudsman

Though it was not in the Ombudsman’s remit to investigate PwC as a private entity, it did look into the MFSA’s lack of response, and welcomed the authority’s full cooperation.

The authority said that the complainant’s requests should have been sent to its communications officers and not its supervisory functions, but nevertheless insisted that it could not provide specific indications on actions such as the appointment of a liquidator. It emphasised that such cases were sensitive in nature, particularly since many decisions in relation to the bank were still sub judice.

The Ombudsman recognised that the MFSA had a delicate role to play and that his office should not unduly interfere in its proceedings. Nevertheless, he emphasised that the principles of good administration dictated that public entities and authorities should reply to enquiries made in a timely manner.

He noted that the complainant was understandably concerned about the funds deposited at the bank, and tasked the authority with forwarding enquiries to the proper unit.

The MFSA was thus asked to direct the competent person to regularly update depositors and others who had an interest about Nemea’s situation.

The authority duly complied, asking PwC to regularly update Nemea depositors and creditors about the bank’s situation. A fresh update was issued within days, in which PwC emphasised that it regularly kept in touch with the MFSA and that further updates would be provided in due course.