BSP strengthens financial consumer protection

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is no longer allowing banks and financial institutions to let clients sign waiver of rights, lengthen prescription period, and calls for protection of customer data, as the regulator further strengthens the protection of financial consumers.

The regulator is   finalizing the guidelines on financial consumer protection to implement Republic Act 11765 or the Financial Products and Services Consumer Protection Act of 2022.

“It is the policy of the state to ensure that appropriate mechanisms are in place to protect the interest of consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices,” BSP Governor Benjamin Diokno said in a draft circular.

Diokno said these mechanisms reinforce the confidence of consumers in the financial market and foster the stability of the Philippine financial system.

BSP-supervised financial institutions (BFSIs) are expected to implement measures to preserve the right of financial consumers to equitable and fair treatment, right to disclose and transparency of financial products and services, as well as the right to protection of consumer assets against fraud and misuse.

Banks and financial institutions are also required to implement measures to protect the right of consumers to data privacy and protection, as well as right to timely handling and redress of complaints.

“The objective of these rules is for BSFIs to manage consumer risks and potential harms to financial consumers, prevent unfair business practices, achieve fair and beneficial consumer outcomes, and empower consumers,” Diokno said.

For one, the BSP stated in the draft circular that no provision of a contract for a financial product or service shall be lawful or enforceable if such provision waives or otherwise deprives a client of a legal right to sue the banks and financial institutions, receive information, have their complaints addressed and resolved or have their non-public client data protected.

Likewise, the regulator said that all actions or claims accruing under the provisions of the new law shall prescribe after five years from the time the financial consumer transaction was consummated or after five years from the discovery of deceit or non-disclosure of material facts,

“Provided, that such actions shall, in any event, prescribe after 10 years from the commission of such violation,” the BSP added in the draft circular.

According to the central bank, it continues to provide and effective consumer redress or complaints-handling mechanism through the BSP Consumer Assistance Mechanism (CAM), mediation, conciliation or other modes of alternative dispute resolution to address conflict from financial consumers arising from financial products or services.

It has the authority to adjudicate all actions arising in connection with financial transactions that are purely civil in nature with claims for payment or reimbursement of money not exceeding P10 million.

“The decision of the BSP in the adjudication shall be final and executory and may not be restrained or set aside by the court except on petition for certiorari on the ground of grave abuse of discretion or lack or excess of jurisdiction of the BSP,” it said.

It added that the aggrieved party of the decision could file a petition for certiorari only within 10 days from receipt of the decision, provided, that in the case of the BSP, the aggrieved party may file the petition with the Court of Appeals.

Under the proposed guidelines, the BSP shall develop and implement a market conduct supervisory framework as well as conduct on-site or off-site surveillance and examination to ascertain that the provisions on consumer protection are complied with.

On the other hand, the BSFIs are required to establish a single consumer assistance mechanism or financial consumer protection assistance mechanism to handle the complaints, inquiries and requests of clients.

The BSP warned it would exercise its powers including the restriction on the ability of BSFIs to continue to collect excessive or unreasonable interests, fees or charges; disqualify or suspend directors, trustees, officers and employees of BSFIs, impose fines, suspension, or penalties for any non-compliance; issue a cease and desist order; and suspend the operation of any BSFI in relation to a particular financial product or service.