Many consumers are probably not aware of the benefits, rights, obligations and protection which arise from directives, local legislation and court judgements. The MFSA’s Consumer Complaints Unit, which is tasked with educating consumers in this area, identifies a number of rights that financial services consumers enjoy.

Direct debits: a different way to pay

A direct debit is an agreement between you and a service provider whereby you authorise the service provider to withdraw money from your bank account on a periodic basis or as a one-off payment for any bills which may be due. A contract between you and the service provider is drawn up, called direct debit mandate, in which you need to provide your bank account number, along with other details.

The service provider is required to notify you at least 14 days prior to debiting the amount due, or as agreed separately between you and the service provider. Your service provider will also need to inform you – at least 14 days in advance of your account being debited, or as otherwise agreed – if there are any changes to the amount, date or frequency of your direct debit.

You may request a refund from your bank for an authorised transaction within eight weeks from the date your account has been debited. The bank is obliged to execute your instructions immediately and no details as to your decision would be requested. If the request for a refund concerns an unauthorised transaction, you should present your claim within 13 months of the date your account has been debited. In this case, the bank reserves the right to investigate your claim prior to reversing the transaction.

You may also choose to cancel the next payment due under the direct debit mandate instructions without affecting future payments or to cancel the whole mandate. Such instructions should be given in writing.

However, keep in mind that cancelling the direct debit mandate may be in breach of your contract, so you should check your contract and seek professional advice. Furthermore, cancelling may not relieve you of your obligations under your contract with your service provider.

Rather than providing their bank account number, some consumers provide their credit card number to their service provider for billing purposes. This is not the same as direct debit and the rights explained here do not apply. This type of payment method is known as continuous payment authority and it may not be wise to choose this payment option.

Investment services: making the most of your hard-earned cash

The term “investment services” describes a whole range of activities related to financial investments. For instance, it includes the provision of advice in respect of a range of financial instruments such as shares, bonds and funds.

All financial firms and their employees are obliged to act honestly, fairly and professionally, in accordance with your best interests and to always provide you with appropriate and comprehensive information which is fair, clear, and not misleading. When offering any services or products, a firm should take into account your individual circumstances to ensure that the investment meets your requirements.

When you instruct a firm to buy or sell a product, your order should be executed in a timely manner sequentially, that is, in the order in which it was placed. If for any reason a firm has a material difficulty in handling your order sequentially, you should be notified.

Following the purchase or sale of a financial product, the firm is required to send you a contract note with essential information such as name of the product, price, date and time and the total sum of commissions and expenses charged. The contract note should be sent by not later than the first business day following execution. If confirmation is received by the firm from a third party (for instance, another stockbroker), the contract note should be sent to you by no later than the first business day following receipt of confirmation from such third party.

All financial firms and their employees are obliged to act honestly

A firm is obliged to send you a statement twice a year, although you may request more frequent statements. Your statement should include information about the contents and valuation of the portfolio, including market values, cash balances at the beginning and end of the reporting period, total amount of dividends and interest received during the period, and the total amount of fees and charges.

Investment advice is not the only manner you may acquire financial investments. For instance, you may come across the term “execution only” which means that you are buying or selling a financial instrument without relying on advice. Some investors are not likely to distinguish between the two services, which therefore makes it even more important to ensure that you know exactly who you’re dealing with and the contents of the documents you are being asked to sign.

Motor insurance: avoiding trouble

With over 350,000 cars on the road, it comes to no surprise that the majority of the 2,000 calls received by the MFSA’s Consumer Complaints Unit in 2014 related to motor insurance. Issues usually arise following an accident and usually concern aspects related to the use and quality of parts, delays, failure to open the claim by any of the parties, and renting of a replacement vehicle.

Generally, if you are not to blame, you are entitled to request the insurance company of the third party to provide or refund you with a replacement vehicle not only for the period your vehicle is being repaired but also for the period you may have to wait for the parts to be sourced by the company. However, this is not an automatic right and you may not be entitled to compensation in instances where, for instance, there are unnecessary delays on your part for repairs to commence.

Where an insurer has reasonable grounds to believe that it may have to pay a claim to a party who has suffered damages or injuries caused by its client who has failed or delayed lodging a claim on time, such insurer is bound by law to treat that event as if a claim had been made. The insurer is obliged by law to formally inform its client of its intention to pay the claim on the lapse of 10 days from such communication, unless an objection is made in writing within 10 days from receipt of such communication.

If the third party insurer directs you to repair at a particular garage and you are not satisfied with how the repair works have been carried out, there is recourse against the insurer (who directed you to repair at its appointed repairer). This is especially useful if the appointed repairer fails to come up with reasonable and acceptable solutions for any unsatisfactory work. Such recourse is not available if you choose the repairer.

There are no hard or fast rules regarding the use of second-hand or non-original parts, and the insurer as well as the surveyor should be objective and fair in their assessment regarding use of spare parts. If imitation, non-original or recycled second-hand parts are used on your vehicle, you should seek assistance from your trusted repairer as these may vary in quality. You should also discuss the parts’ origin and brand with the surveyor and insurer before commencing the repairs. You have the right to refuse spare parts of dubious or inferior quality especially if their installation might put you at any risk.

If you are involved in a collision involving vehicles of the Armed Forces of Malta, police and Maltese government, get in touch with the police rather than the wardens. If you contact the latter, they will contact the police themselves once they arrive on the spot. Claims involving such vehicles are handled by the Motor Insurers’ Bureau.

Life insurance policies

Most life insurance policies have a cooling off period of not more than 30 days. If you have purchased a life insurance policy, go through the documents you receive following your application. You should be given a statutory notice form, which clearly explains your rights to reconsider your decision to buy long-term cover (such as life insurance or a retirement plan). The 30-day cooling-off period starts when you receive this form.

During this time, you have a right to inform the insurer that you don’t want the policy. You are not required to given a reason for your decision. You are also entitled to receive a full refund of any initial premiums you have already paid.

The statutory notice has to be in Maltese and English and easily legible. Go through the questions in the form. If you doubt your decision, act immediately without allowing the 30 days to expire.

With your paperwork, you should also have a notice of cancellation. You need to fill in this form and hand it over to the person who sold you the policy. As soon as the notice of cancellation is served, your policy is cancelled. Keep a copy of the form before you hand it in and make sure that you are given a receipt or acknowledgment there and then. The date when you hand in the notice of cancellation should be clearly stated.

If the insurer gives you any reward or benefit in the meantime, you are required to pay it back.

The statutory notice is not required in certain instances, such as when: you are purchasing term insurance in order to obtain a loan; you are not the life assured or the spouse or child of the life assured; or you are not purchasing life insurance as an individual, such as a group life policy.

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