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Philippines: BSP to tighten regulation of pawnshops
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is set to raise the bar of the reporting governance framework for pawnshops, as the industry continues to expand its range of products and services that it offers to the public.
The regulator is set to adopt the new reporting governance framework as it recognizes that a complete, accurate, consistent, reliable and timely submission of required information concerning a pawnshop’s operation and management, financial condition and results of operations facilitate the BSP’s exercise of effective supervision over pawnshops.
At the same time, the BSP said that high quality individual pawnshop reports support the regulator’s determination and formulation of appropriate and responsive regulatory policies, supervisory tools, approaches and interventions, and the pawnshop operator/management’s business decision-making process.
“It is incumbent upon the pawnshop proprietor/partner/board of directors and senior management or key officers to implement an effective reporting system to generate complete, accurate, consistent, reliable and timely reports to the BSP,” the central bank said.
According to the regulator, pawnshops are expected to capitalize on available information technology in establishing an effective reporting system that is appropriate for their size and complexity of operations.
In a draft circular, it said the BSP would prescribe reasonable reporting standards, which shall consider the cost of reporting relative to the expected benefits.
“Reports submitted to the BSP must be complete, accurate, consistent, reliable and timely to be considered compliant with the Bangko Sentral reporting standards,” it said.
According to the central bank, reports should be reviewed and validated by the pawnshops prior to submission to ensure their completeness and correctness, as reports with incomplete schedules or attachments shall be considered non-compliant with the reporting standards.
“The proprietor/partner/board of directors shall be responsible for establishing an effective reporting system and performing adequate oversight on the implementation thereof by senior management/key officers to ensure the pawnshop’s adherence to the reporting standards set by the BSP,’ it said.
The regulator is set to impose sanctions on pawnshops that failed to submit the required reports or for erroneous and delayed reports.
The proposed prescribed fines for reporting violations would be pegged between P300 and P450 per occurrence for primary reports and P60 to P150 for secondary reports.
“Pawnshops have until June 30, 2023 to make the necessary preparations to their systems and processes to ensure full compliance with the establishment of an effective reporting system,” the BSP said.
The Philippine pawn broking industry continues to grow in terms of assets, network, and capitalization as it expands the range of products and services it offers to the public.
The assets of the pawnshop sector rose by 4.7 percent to P96.9 billion in 2021 from P92.5 billion in 2020, while the industry’s capitalization went up by 2.6 percent to P42.2 billion and remains adequate to support risk-taking activities.
Pawnshops are present in 1,361 of 1,634 cities and municipalities, or 83.3 percent of all local government units across the country. Its network expanded to 1,156 head offices and 14,350 branches nationwide by end-March 2022.
Source: https://www.philstar.com/business/2022/08/08/2201000/bsp-tighten-regulation-pawnshops