BSP bats for consumer protection bill

Published March 5, 2021, 7:00 AM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) is pushing for faster approval of the crucial Financial Consumer Protection Act (FCPA) to update and better define the regulator or the central bank powers to protect consumers from abuses, errors and frauds.

BSP Governor Benjamin E. Diokno said the new law, once approved, highlights consumer protection as a shared responsibility among regulators and consumers. It empowers the BSP, Securities and Exchange Commission, Insurance Commission and Cooperative Development Authority to issue consumer protection rules as well as conduct market surveillance and examination, and adjudicate complaints.  

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno ( Bloomberg file photo)

“This measure enhances the authority of regulators to protect the interest of financial consumers,” said Diokno on Thursday. “This is seen to instill discipline among financial service providers, boost public confidence in our financial markets, and promote financial stability.” 

Diokno said the FCPA will also mandate financial service providers to comply with the “fair and respectful treatment of clients”, to become more transparent, to protect consumer data and privacy, and provide access to redress mechanism. 

The FCPA is intended to benefit consumers, said the BSP chief. “For instance, regulators may issue a cease and desist order without the need for prior hearing, if an act amounts to fraud or causes grave irreparable or injury to consumers. This may be applicable to unfair collection practices amounting to threats or harassment against a financial consumer.”

Diokno pointed out that with adjudication process under the proposed bill, consumers do not have to submit to the courts if they want to claim return of money from a financial service provider. “The regulator may already adjudicate and award the amount, as warranted,” he said. He cited as example undispensed ATM withdrawals. “Both the depository bank, and bank operating the ATM, may be liable to cardholders. However, when neither is willing to settle a customer’s claim, the consumer may go through the adjudication process and file a claim directly with the BSP.”

Another benefit is that automatically, financial service providers found to be at fault for credit card fraud in online shopping will be sanctioned via fines, suspension or penalties, said Diokno.

The BSP chief said clearly, the new law has a powerful legal mandate for customer-centric practices and the management of client relationships.  

“We hope that this critical bill be passed into law, especially with the prevalence of fraudulent activities related to financial consumers,” said Diokno.

At the moment, some versions of FCPA have been filed both in the Lower House and the Senate. The consolidated version “Financial Products and Services Consumer Protection Act” at the Lower House was already passed on third reading last June 2, 2020. The next day, it was sent to the Senate Committee on Banks, Financial Institutions and Currencies for deliberation. 

Diokno said the volume of consumer complaints submitted to the BSP has risen due to the pandemic. He also views it as indication that more Filipinos are aware of the BSP’s consumer assistance mechanism or CAM.

Of the 20,000 financial consumer complaints received last year, Diokno said only 13 percent were received through regular channels, the rest via CAM. About 13 percent refers to fraudulent, unauthorized transacions of BSP-supervised financial institutions, such as deposit, credit card, e-money services and remittances.

With both CAM and the chatbot BOB or BSP Online Buddy, some 23,000 complaints have been registered at end-2020. Around 20 percent or 4,600 were credit card complaints, and 12 percent of the total complaints volume are on the implementation of the 60-day mandatory grace period for loan and credit card products under the two Bayanihan laws.

All of these complaints were referred to the senior management of the concerned banks for appropriate action. Diokno said most of these complaints are resolved either by repayments scheme or loan restructuring.