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Bangko Sentral amends regulations on financial consumer protection

ROMAIN DANCRE-UNSPLASH

The Bangko Sentral ng Pilipinas (BSP), pursuant to the rulemaking authority vested in it by the recently enacted Financial Products and Services Consumer Protection Act (Republic Act No. 11765), issued Circular No. 1160 Series of 2022 amending the financial consumer protection regulations contained in the Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).

The circular amended and expanded the standards that the Bangko Sentral-supervised institutions (BSIs) must adhere to at all times in dealing with their clients — the financial consumers.

DISCLOSURE AND TRANSPARENCYUnder the Amended Regulations, BSIs shall now require their clients to sign a written or electronic disclosure statement as affirmation of the clients’ receipt and understanding of the statement. The disclosure statement must contain information on the type and amount of fees, charges, and interests, as well as the standard terms and conditions. The information must be provided by the BSIs to their clients during the pre-contractual stage, at the point of entering a contract, and during the term of the contract.

PROTECTION OF CLIENT INFORMATIONThe Amended Regulations establish the right of the BSI’s clients to refuse the sharing of their information with a third party, and requesting the removal of their data from the BSI’s system if they wish to be excluded from receiving advertisements and other notifications, or they no longer wish to use the BSI’s services.

BSIs are required to notify their clients of the occurrence of any privacy breach that may leave their data vulnerable. BSIs are also required to provide clear policies and procedures on addressing data breaches, from the discovery of breaches or detection of security incidents, its evaluation and investigation, documentation, notification to affected clients, compensation to clients, and compliance with the reportorial requirements of regulatory bodies.

FAIR TREATMENTThe Amended Regulations recognize the right of the BSIs to select their clients but expressly prohibits discrimination against clients on the basis of race, age, financial capacity, ethnicity, origin, gender, disability, health condition, sexual orientation, religious affiliation and practice, or political affiliation.

It also enumerates the circumstances by which a term and/or condition of a BSI’s contract with its client is deemed unfair, which include, among others, the following:

1. It permits the BSI to unilaterally determine whether the contract has been breached or imposes an unreasonable penalty for a breach of the contract.

2. It amends the terms of the contract without adequate notice and/or without specifying the circumstances in which this may occur and/or does not provide a right of termination when such amendment occurs.

3. It binds the client to terms that he cannot realistically familiarize himself with before the contract is executed.

EFFECTIVE RECOURSEThe Amended Regulations now require each BSI to establish a single Financial Consumer Protection Assistance Mechanism (FCPAM) to provide free assistance to clients on their concerns about the BSI’s financial products, services and/or transactions. This shall include handling of complaints, inquiries, and requests.

The BSI should ensure that channels or platforms for submitting complaints are adapted to a client’s needs (i.e., level of literacy, accessibility) and local specifications (i.e., language or dialect). Channels used to submit complaints can include telephone, fax, e-mail, complaint/suggestion boxes, web presence, mobile phone apps, and in person. To the extent possible and employing a proportionate approach, the BSI should make available a toll-free number, free-response SMS texting, or free data for apps or live-chat to encourage access. A dedicated 24/7 customer-care telephone line, especially for fraud-related concerns, should be put in place.

The BSI’s FCPAM is a first-level recourse mechanism for clients who are dissatisfied with the financial product or service of a BSI. This means that clients are first required to report their complaints, inquiries, or requests, through the FCPAM of the concerned BSI. Clients who are dissatisfied with the BSI’s handling of their complaints, inquiries, or requests, may escalate their concerns with the Bangko Sentral Consumer Assistance Mechanism (CAM). It must be noted that reporting the concern with the BSI’s FCPAM is a condition precedent to the filing of a complaint to initiate the Bangko Sentral CAM.

PROTECTION OF CONSUMER ASSETS AGAINST FRAUD AND MISUSEBSIs must provide necessary assistance to their clients in mitigating the risks of fraud and misuse. They must provide clear information on the actions taken on a complaint, inquiry, or request from a client involving fraudulent or unauthorized transactions.

In approving these amendments, the BSP aims to manage risks and potential harm to financial consumers, prevent unfair business practices, achieve fair and beneficial consumer outcomes, and empower financial consumers to make better and informed financial decisions.

The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.

April Jane S. Sillada is an associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Davao Branch.

(6382) 224-0996

assillada@accralaw.com

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