The Bangko Sentral ng Pilipinas (BSP) is reminding all banks and non-banks to strictly practice fair treatment in setting terms and conditions applied to depositors and clients to ensure consumer protection rights are upheld and respected at all times.
In a memo (Memorandum No. M-2021-069) to BSP supervised financial institutions (BSFIs), BSP Deputy Governor Chuchi G. Fonacier stressed on BSFIs’ compliance with the BSP Financial Consumer Protection Framework which was issued in 2019 under Circular No. 1048.
Fonacier cited the circular when she reiterated that BSFIs should “uphold” the “Fair Treatment” principles specified in the consumer protection framework.
“BSFIs are required to observe fair and equitable terms and conditions, among other things,” she said.
Fonacier said that based on the circular, the “terms and conditions” should not be “unfair in that there is significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer”.
“Thus, any broad and all-encompassing disclaimer of legal liability on the part of the bank for any losses incurred by their customers is not in conformance with the above-cited regulation,” she said in the memo that she signed on Dec. 22.
In the same memo, Fonacier said that since banks "are endowed with the authority to accept deposits from the public” they are reminded that they are “required to exercise a high degree of diligence, if not utmost care, in providing financial services.”
“In particular, jurisprudence charge banks with the obligation to treat their client’s account with the highest degree of care, considering the fiduciary nature of their relationship with the depositors,” she said.
Fonacier said the BSP expect BSFIs to have a Consumer Protection Risk Management System and Consumer Assistance Mechanism that ensure systematic application of the Consumer Protection Standards of Conduct provided under the circular.
“Said standards should reflect the core principle of ‘do no harm’,” she said.
“Practices that harm consumers introduce risks not only at the level of the financial institution, but also to the overall health of the financial sector particularly through decreased public trust and confidence,” added Fonacier.
Banks and non-banks are generally expected to adopt effective risk management systems and “adhere to prudential standards and requirements to contribute to the sustained safety and soundness of the financial system.”
Fonacier said these include protecting the interest and upholding the trust and confidence of consumers and the general public in the financial system.
On Dec. 21, the country’s largest lender, BDO Unibank Inc., who had been resolving a recent hacking crisis, issued a statement that while it will be reimbursing the 700 identified affected accounts, it has said that the bank “is not legally liable”.
Amid complaints of quit-claims and waivers that the bank had clients sign before processing the reimbursement, the SM Group-owned bank said that there was “no added clause due to the recent incident” and that it was their normal liability clause.
BDO said however that it has “made exceptions and shouldered the losses not caused by the clients to maintain good customer relationship even if the bank is not legally liable.”
After the Dec. 11-12 hacking incident, the BSP’s task force was also looking into BDO’s terms and conditions or waivers in reimbursing the hacked accounts.