The Bangko Sentral ng Pilipinas (BSP) is amending its regulations governing banks’ cross-selling guidelines by expanding the scope of an allied undertaking – or part of a financial conglomerate -- to transact cross-selling.
The proposed circular is currently being circulated among banks. The BSP has set a feedback deadline of Dec. 4, 2024 for banks that have issues with the draft circular, or if they want to recommend other ways of expanding the scope of an allied undertaking’s cross-selling.
The BSP defines cross-selling as the sale of a financial product – other than the bank’s own financial product -- to a bank client inside the bank premises. In effect, cross-selling is a market practice where bank premises serve as a distribution channel for financial products that are not those of the bank.
A financial conglomerate, meanwhile, is a group of inter-related companies or entities that includes a bank, a securities firm or an insurance unit.
The draft circular identifies financial products that could be cross-sold such as simple retail financial products “that do not create exposure to investment risks”.
These are retail lending or loan products such as credit cards, home mortgage loans, personal loans, and auto loans, among others. Retail deposit products can also be offered, including checking accounts, savings, time deposits and other related products. Cash cards and debit cards are also allowed.
In addition, the cross-selling of financial products such as insurance and collective investment schemes or CIS including mutual funds, unit investment trust funds, or variable unit-linked life insurance policy are also allowed.
The BSP said only financial products that are created or distributed by the allied undertaking of the bank can be cross-sold.
It will require banks to have a formal written policy to “assess the nature of the financial product and its suitability for target customer segments.” The bank should also have a mechanism in place for complaints due to the cross-selling transactions.
The last time the BSP made significant reviews or changes to the cross-selling rules was in 2015.
At the time, the BSP was considering expanding the networks that can sell and market financial instruments and products, part of the cross-selling policy liberalization.
Banks already market and cross-sell credit cards, automotive and home mortgage products as well as personal and other retail loans. Cash, debit and related products and other similar financial instruments are also allowed to be sold and marketed across the branch networks provided these have been approved by the Monetary Board of the BSP.
What took some time to discuss and review is the inclusion of CIS products to be cross-sold.