​The European Union aims to provide the highest level of protection to consumers, as established by Article 169(1) and point (a) of Article 169(2) of the Treaty on the Functioning of the European Union (TFEU) . It is with this aim in mind that the EU enacts Regulations and Directives to ensure a functioning market without internal frontiers as it constantly strives to simplify cross-border disputes, also with the creation of alternative dispute resolution (ADR).

Directive 2013/11/EU sets up one of these alternative dispute resolutions (ADR), in this case where a consumer is involved in matters relating to contractual obligations stemming from sales contracts or service contracts between a trader established in an EU Member State and a customer resident in another EU Member State.

Each Member State has its own ADR entity and procedure, which entity, according to the Directive shall maintain an up-to-date website, provide the interested parties with all the necessary information connected to the procedure, enable the consumer to submit a complaint offline, enable exchange of information between the parties via electronic means or by post, accept both domestic and cross-border disputes including those covered by Regulation (EU) No 524/2013, which sets up the Online Dispute Resolution (ODR) platform, and to ensure Data Protection according to EU Law when dealing with disputes take all measures

How does the ADR in the context of Financial Services work in Malta?

The Arbiter for Financial Services as established under Chapter 555 of the Laws of Malta, is the ADR entity that deals with the complaints falling within the scope of Directive 2013/11/EU.

Part V of Chapter 555 of the Laws of Malta entitled Arbiter for Financial Services Act, provides that the complaint is to be filed in writing and shall identify the party against whom it is being made. It shall include the reasons of the dispute and the remedy that is being sought. The Arbiter, after determining whether such a complaint falls within its competence, will proceed by taking a decision on the matter. Before taking the decision however, the respondent is to be informed about the complaint and shall have the opportunity to submit a reply, within twenty days from the day the Arbiter informs him about such a complaint.

The Act also provides that in cases of complaints about the conduct of a financial services provider, parties may participate in mediation. Mediation is however voluntary and any of the parties can refuse to participate and/or withdraw at any time of the process.


The Arbiter is to give a decision within 90 days of receipt of the complaint, or within one year in cases of complaints of a more complex nature. The Arbiter’s findings and conclusions shall be drawn up in writing and the Arbiter can direct the financial services provider to review, rectify, mitigate or change the conduct complained of. The Arbiter can also ask the financial services provider to provide reasons or explanations for the conduct subject to the complaint, ask the financial services provider to change a practice relating to that conduct, order the services provider to pay an amount of compensation, and specify the period within which the direction is to be carried out by the services provider.

This decision can be appealed in front of the Court of Appeal (Inferior Jurisdiction).

Effectiveness of the ADR

The purpose of any ADR is to minimize the costs, maximize the efficiency of out of court settlement between the consumer and the trader, and saving time. Through Directive 2013/11/EU, the European Union made it possible for each Member State to implement a mechanism according to the local exigencies, while at the same establishing a minimum set of requirements to guarantee an easy and cheap access by consumers living in other Member States. In this way consumers caught in disputes with cross-border financial institutions or services providers, will be in a better position to fight for and safeguard their rights. It also makes it easier for the consumer to fight abusive and corrupt practices by such institutions.


In order to make is easier for consumers to have access to ADR in the area of financial services, FIN-NET was set up in 2011 with the intent of consolidating cross-border co-operation between States under the framework of Directive 2013/11/EU, and the Regulation dealing with on-line dispute resolution in consumer matters. There are currently 60 members across 27 countries in the EU and the European Economic Area, which includes Iceland, Liechtenstein, and Norway.

Iuris Malta is very active in litigation, mediation, and arbitration. If you require further information or assistance contact Dr Simon Galea Testaferrata or Dr Stanley Joe Portelli or send an email on info@iurismalta.com.

The information provided in this article does not, and is not intended to constitute legal advice. Any information is provided for general information purposes only.