Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla said they will release the crucial rules of procedure for mediation and adjudication this month as part of its implementation of Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act (FCPA).
Last Nov. 28, 2022, the BSP already approved Circular No. 1160 to “bolster the BSP’s long-standing initiatives to protect the interest of consumers”.
Medalla said that starting this year, to strengthen its financial consumer protection and consumer assistance, they will “exercise the authority conferred by the FCPA that was enacted last year” and will soon issue the rules of procedure for mediation and adjudication in January.
“We’re truly living up to our label as a quasi-judicial authority,” he said.
Medalla added that financial education “is a key component of consumer protection and we are working with various partners to empower Filipinos with the skills to understand finance. And with our regulations and our guidance, disputes should be quickly resolved and settled.”
Through the FCPA, the BSP has become more effective in handling consumer complaints and disputes.
The FCPA was made into a law in May of 2022. By June of the same year, the BSP already has a draft of the first circular to adopt the FCPA provisions. Industry consultations and discussions took another five months before the approval of Circular No. 1160.
Medalla said the FCPA will lead to a stronger banking system as well because it will “contribute significantly to the stability of the financial system.”
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 circular also covers all financial products and services by BSP-supervised financial institutions (BSFIs) 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 BSFIs 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 BSFIs to do the following: practice responsible pricing of its products and services; provide cooling-off periods which allow BSFI 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 BSFIs 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.
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.
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.
Without the FCPA, the BSP’s complaints’ resolutions process is constrained due to the central bank’s limited legal authority to adjudicate.