BSP approves stronger consumer protection rules
By LEE C. CHIPONGIAN
The Bangko Sentral ng Pilipinas (BSP) has approved new rules to protect the interest of consumers of financial products and services through the effective handling of complaints and disputes.
The BSP’s Monetary Board on Nov. 28 issued Circular No. 1160 to implement Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act (FCPA).
The FCPA was made into a law last May. By June, the BSP drafted the first circular to adopt the FCPA provisions. Industry consultations and discussions took another five months before the approval of the circular.
BSP Governor Felipe M. Medalla said the FCPA, which improves procedures for the consumer assistance mechanism, mediation and adjudication of cases in the BSP, will lead to a stronger banking system as well.
“The circular is expected to bolster the BSP’s longstanding initiatives to protect the interest of consumers who entrust their funds to the institutions we supervise. This is seen to contribute significantly to the stability of the financial system,” said Medalla.
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.
The BSP said the new circular covers all financial products and services by BSP-supervised institutions (BSIs) such as deposits, investments, fund transfers, trust products, loans, payments, remittances, and the “broad range of financial products or services accessed and delivered through digital channels.”
The BSP also emphasized that BSIs are required to put up a consumer protection risk management system and to follow the standards of disclosure and transparency. It also includes fair treatment to guard against discriminatory practices as well as the protection of client data as per the Data Privacy Act and effective recourse for handling clients’ complaints.
The FCPA-compliant rules and regulations also directs BSIs to do the following: practice responsible pricing of its products and services; provide cooling-off periods which allow BSI clients to consider costs and risks of financial products and services without pressure; and setup a 24/7 channel for reporting of fraud or misuse.
All BSIs are liable for violations of the FCPA by its personnel, third-party agents and service providers, said the BSP, and will be fined, penalized and slapped with cease and desist orders and administrative cases against its officers.
“As the circular emphasizes the BSIs’ responsibilities in upholding financial consumer rights, consumers are enjoined to keep themselves informed and protected when making financial transactions,” said the BSP. “Consumer protection (is) a shared responsibility among financial regulators, the BSIs, and all financial consumers,” it added.
Based on the circular’s policy statement, it assured financial consumers that appropriate mechanisms are in place to protect their interest in a transparent, fair and sound market conduct as well as effective handling of disputes.
Such measures protect the following rights of financial consumers: 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 right to timely handling and redress of complaints.
Without the FCPA, the BSP’s complaints’ resolutions process is constrained due to the central bank’s limited legal authority to adjudicate.
The BSP alone 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.