By Lee C. Chipongian
The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board has approved the implementing rules and regulations (IRR) of the credit card law which will further open the market and enhance consumer protection mechanisms.
The central bank sees credit card loan growth from a consumption-driven economy. “There is further potential for expansion in light of the current economic growth, the country’s demographics and the increasingly digital payment system. The recently approved rules aim to ensure that such growth in the credit card industry will be safe and sound, and one that protects.”
The IRR is a framework for the entry of new players in the credit card business, not just the banks, their affiliates and subsidiaries, the BSP said in statement Friday. More players will encourage transparent and competitive interest rates, innovative products and improved services. “All credit card issuers are subject to standards of good governance, adequate risk management, and strong consumer protection mechanisms.”
The BSP said the IRR will have a phased implementation for some provisions to allow for necessary adjustments in the systems and processes of existing credit card issuers. Currently there are eight million credit cards issued in the country.
The approved regulation details the transparent computing of charges and fees, and safeguards against unfair collection practices, immediate posting of payments, confidentiality of consumer data, and expeditious resolution of complaints and disputed transactions, among others, listed the BSP.
The Philippine Credit Card Industry Regulation Law or Republic Act No. 10870 and its IRR requires all credit card issuers to “fully disclose, in an understandable way, the manner of computing finance charges and other fees related to credit card use as well as provide ample notification prior to effecting any changes in the said charges.”
This should be included in the terms and conditions of credit card contracts, billing statements and in application forms.
“The rules likewise clarify that the finance charges shall be computed based on the unpaid amount of the outstanding balance as of statement cut-off date and shall not include current and deferred charges,” said the BSP.
The BSP said the rules preventing unfair collection practices are much stronger in the new IRR, directing collection agents to observe good faith, fair and reasonable conduct, and proper decorum when dealing with all consumers, including cardholders already in default.
It also enhanced protection of cardholders’ right to data privacy and redress. “Customer information can only be shared to third parties upon a cardholder’s informed consent, and under specific conditions defined by the law. All issuers must also have consumer assistance units to expeditiously address cardholders’ concerns, such as billing errors, unauthorized transactions and other credit card related issues, within 90 days from receipt of the concerns,” said the BSP.
In addition, payments using cash, check or debit cards, made through any accredited payment center shall be posted on the same day by credit card issuers. Due dates falling on weekends or holidays shall be automatically moved to the next business day, said the BSP.