Philippines: BSP raises the bar for consumer protection
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has raised the bar for consumer protection in line with its broader efforts to promote the welfare of financial consumers.
BSP Governor Felipe Medalla has issued Circular 1160 to implement Republic Act 11765 or the Financial Products and Services Consumer Protection Act (FCPA).
“The circular is expected to bolster the BSP’s longstanding initiatives to protect the interest of consumers who entrust their funds to the institutions we supervise. This is seen to contribute significantly to the stability of the financial system,” Medalla said.
Last Nov. 17, the central bank’s Monetary Board approved the adoption of the amended regulations and guidelines on financial consumer protection.
“It is the policy of the BSP to ensure that appropriate mechanisms are in place to protect the interest of consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and effective handling of financial consumer disputes aligned with global best practices,” Medalla stated in the circular.
The circular covers all financial products and services, such as deposits, investments, fund transfers, trust products, loans, payments, remittances, and the broad range of financial products or services accessed and delivered through digital channels that are created, developed, and marketed by BSP-supervised institutions (BSIs).
Banks and financial institutions are now required to protect the right of financial consumers to equitable and fair treatment, disclosure and transparency of financial products and services; protection of consumer assets against fraud and misuse; data privacy and protection; as well as timely handling and redress of complaints.
The new guidelines require BSIs to establish a consumer protection risk management system for further safeguarding of client welfare.
It also mandates banks and financial institutions to adhere to the standards of disclosure and transparency to ensure that accurate information about its products and services are provided; fair treatment to guard against discriminatory practices; protection of client data in view of RA 10173 or the Data Privacy Act of 2012; and effective recourse for handling clients’ complaints.
The circular directs BSIs to practice responsible pricing of its products and services; provide cooling-off periods that allow clients to consider costs and risks of financial products and services without pressure.
Furthermore, banks and financial institutions were told to setup a 24/7 channel for reporting of fraud or misuse.
“BSls should provide its clients with a free and active reporting channel/s, which may consist of a manned phone line, mobile number, online portal, email, chatbot, instant messaging, or other closely-monitored communication channels which should be available on a 24/7 basis,” Medalla said.
Under the guidelines, the BSP can impose sanctions, including fines, penalties, cease and desist orders, and administrative cases against the BSIs, as well as officers violating the framework.
The regulator reiterated that no provision of a contract for a financial product or service shall be lawful or enforceable if such provision waives or otherwise deprives a client of a legal right to sue the BSl, receive information, have their complaints addressed and resolved, or have their client data protected.
“Such a waiver may cover agreements or contracts that limit the BSI’s liability for the acts or omissions of its directors, trustees or officers, employees or agents; obligations of the BSI; or the right of the financial consumer to exercise any rights under the FCPA, its IRR or any relevant laws, rules and regulations,” Medalla added.
According to the BSP, consumer protection is a shared responsibility among financial regulators, the BSIs, and all financial consumers.