By Lee C. Chipongian
The central bank said the Monetary Board has expanded the disclosure requirement of all supervised financial institutions under the enhanced “Truth in Lending Act” (TLA).
The Bangko Sentral ng Pilipinas (BSP) in a statement said the expanded disclosure requirement will apply to banks, quasi-banks, non-stock savings and loan associations, pawnshops, non-bank financial institutions, as well as banks/non-banks operating as credit card issuers.
“The enhanced law (or Republic Act No. 3765) now allows disclosure through various channels of communication, including educational videos and social media and is meant to encourage BSP-supervised financial institutions (BSFIs) to be more creative, efficient, and effective in disseminating the salient TLA information, while adhering to consumer protection standards and social media risk management guidelines,” said the BSP.
The law puts more emphasis on transparency such as on the cost of credit as “critical elements that empower consumers to make objective comparison of banking products and informed financial decisions.”
Previously the BSP has asked government lending institutions Home Development Mutual Fund (HDMF) and social securities providers GSIS and SSS to align provisions with the TLA and with central bank circulars for the transparency of all credit transactions.
Since 2012, the BSP has been encouraging all retail credit providers both public and private sectors, to adhere to the loan price transparency and improve disclosure practices to protect borrowers, in particular retail loans for small businesses and agri-related loans, and consumer loans.
The BSP has also asked government credit providers such as HDMF to practice loan transparency especially in the disclosure of the applicable rates when a member borrows for housing loans, and to properly disclose the effective and nominal rates.