BSP sets rules on consumer complaints

Published August 9, 2022, 8:10 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) has drafted additional circulars adopting revised rules of procedure for the consumer assistance mechanism (CAM), mediation and adjudication of cases filed with the BSP under the Financial Products and Services Consumer Protection Act (FCPA).

The latest proposed circular is part of several regulations being prepared by the BSP for the effective implementation of the FCPA which was signed into a law last May as Republic Act No. 11765.

BSP building and logo/Reuters

Banks and non-banks have a feedback deadline of Aug. 22 to send to BSP their comments and suggestions with regards to CAM, and procedures for mediation and adjudication of cases.

Based on the draft circular, a Financial Consumer Protection Assistance Mechanism (FCPAM) is required for all BSP supervised financial institutions or BSFIs as the first-level recourse mechanism for financial consumers who are dissatisfied with a financial product or service.

The BSP said complainants are first required to report their concern to BSFI’s FCPAM. If still unsatisfied with the BSFI’s handling of their complaints, inquiries and requests, they may escalate their concerns with the BSP-CAM within 10 days from the date of termination of the FCPAM.

As for mediation proceedings, this can start within 15 days from the complainants request to the BSP Consumer Complaint Resolution Office (CCRO) which is the office mandated to conduct mediation and adjudication proceedings.

The mediation period will only be for 30 days with no extension. Mediation will be resolved through settlement agreement. The BSP recommends mostly video conferencing or online mediation but face-to-face can be accommodated if the complainant will request it.

The BSP has previously circulated to BSFIs its proposed rules on adjudication including scope and jurisdiction.

All financial consumer complaints are purely civil in nature, and claims or relief for payment or reimbursement will not exceed P10 million, said the BSP.

“Except as to the amount of actual damages, legal interest, attorney’s

fees and costs of suit, no other form of damages shall be recoverable.

Complaints where the claim or relief prayed for exceeds P10 million in total shall be filed in the proper court or with the appropriate government agency having

jurisdiction, as applicable,” said the BSP in the draft circular.

The significance of the pro-consumer law, besides BSP improving its complaints handling mechanism, is that its consumer redress includes central bank’s capability to adjudicate or pronounce judgement in connection with financial transactions. With this power, the BSP can order the reimbursement of a sum of money not exceeding P10 million.

Once approved by the Monetary Board, the BSP said appropriate mechanisms will be in place to protect the interest of consumers of financial products and services “under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices.”

“These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system,” said the BSP.

As such, it assures that the FCPA-compliant rules will protect the rights of financial consumers such as: the right to equitable and fair treatment; right to disclosure and transparency of financial products and services; right to protection of consumer assets against fraud and misuse; right to data privacy and protection; and the right to timely handling and redress of complaints.

The FCPA will empower financial regulators such as the BSP, Securities and Exchange Commission, Insurance Commission and the Cooperative Development Authority to effectively exercise rulemaking, enforcement and adjudication powers in line with their consumer protection mandates. FCPA also has penal provisions for violations of the law.

Without the FCPA, the BSP’s complaints’ resolutions process is constrained due to the central bank’s limited legal authority to adjudicate.

In 2021, the BSP processed almost 10,000 consumer complaints with a value of P540 million.

Including the pre-Covid 2019 period and when the pandemic was declared in 2020, the BSP has received and processed about P2 billion-worth of consumer complaints in the last three years.

For both the pandemic years of 2020 and 2021 only, the BSP processed 42,456 complaints. These are customer complaints against banks, non-banks, e-money issuers, operators of payment system, among others.

The use of increased digitalization during the pandemic has also brought with it “graver risks” since complaints related to the use of internet banking and mobile banking accounted for 45.2 percent of the total complaints received by the BSP last year.