The Bangko Sentral ng Pilipinas (BSP) has approved the guidelines on how it will mediate and adjudicate financial consumers’ complaints based on provisions under Republic Act No. 11765 or the Financial Products and Services Consumer Protection Act (FCPA). BSP Governor Felipe M. Medalla said Circular No. 1169 or the “Rules of Procedure for the Consumer Assistance Mechanism, Mediation and Adjudication of Cases in the Bangko Sentral ng Pilipinas” will take effect on May 1, 2023. Medalla has always said that they will strictly implement the FCPA to protect the interest of consumers, especially financial consumers, and that starting this year, the public can be assured that BSP will exercise the authority conferred by the FCPA in mediating and adjudicating complaints. “We’re truly living up to our label as a quasi-judicial authority,” he said. The FCPA gives BSP the power to resolve disputes involving an amount not more than P10 million. Based on the circular, complaints will be addressed within 30 days, including the reply and rejoinder once elevated to the BSP. If it escalates to mediation and adjudication, the mediation proceedings will be conducted virtually or through online video conferencing using the BSP-prescribed platform. Complainants who prefer in-person or face-to-face mediation, can make a request to the mediator. Mediation, as defined in the circular, is an intervention by which the BSP, through its duly authorized mediation officers, facilitates communication and negotiation between the parties, and assists them in reaching a mutually acceptable settlement. lt is voluntary in nature and strlctly confidentlal. The mediation period will be for 30 days. However for “meritorious reasons and as agreed upon by the parties, a longer period may be allowed.” As for the adjudication proceedings, this will only be conducted in-person or face-to-face. But, the BSP will permit virtual or online hearing when appropriate. “The proceedings before the BSP shall be summary and non-litigious in nature (while) the technical rules of procedure obtaining in the courts of law shall not apply,” said the BSP. 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 “purely civil in nature” financial transactions. With this power, the BSP can order the reimbursement of a sum of money not exceeding P10 million. The BSP said in establishing the guidelines and expectations, the BSP-supervised institutions or BSIs will institutionalize consumer protection as an integral component of corporate governance and culture as well as risk management. It will enable BSIs to manage consumer risks and potential harm to financial consumers, prevent unfair business practices, achieve fair and beneficial consumer outcomes and empower consumers. BSIs will also have the Financial Consumer Protection Assistance Mechanism or FCPAM commensurate to the size, structure, nature of products, services, and complexity of operations. This will pay particular focus on the protection of consumer assets against fraud and misuse. Medalla, in the circular, said the BSI's FCPAM is a first-level recourse mechanism for financial consumers who are dissatisfied with a financial product or service. Meanwhile, the BSP’s Consumer Assistance Mechanism or BSP-CAM is a second-level recourse for complainants who first reported their issues to the BSI but was not satisfied in how the BSI handled their concerns. “The BSP-CAM is primarily facilitative in nature and is aimed at clarifying financial consumer issues by allowing the parties to communicate with each other through the BSP,” said the BSP. The BSP-CAM is a condition precedent to both mediation and adjudication. The FCPA empowers 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. 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, which was the first set of guidelines. It will take 12 months before the BSP will release its rules of procedure. Medalla had earlier said that the FCPA will lead to a stronger banking system because it will “contribute significantly to the stability of the financial system.” BSP Circular No. 1160 clarifies the FCPA coverage which is all of the BSI’s financial products and services 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 did not say if the latest circular will be the last relating to the FCPA.