In its meeting held last Tuesday, 26 October 2004, the Financial Sector Forum (FSF) made significant progress in organizing work plans that will facilitate the resolution of mutual concerns raised by the member agencies at the inception of the Forum and during its meeting held last August.
In terms of supervisory and regulatory concerns, work will mostly focus on harmonizing policies across all the member agencies. Identified as high priority are the review, alignment and development of guidelines on the following areas: risk management, capital adequacy, issuance of securities by non-banks, prudential limits, collective investment schemes, and analogous insurance products. In order to strengthen policy implementation, the Forum agreed to undertake joint training programs that will ensure the continuous upgrading of skills as well as uniform interpretations of comparable guidelines.
The Forum has also crafted an agenda for the rationalization of disclosure requirements of firms that are covered by the mandates of the BSP, SEC, IC and the PDIC. The goal is to enhance the quality of existing disclosures, and at the same time remove the redundancies in the reporting cycle. Another move to lessen the regulatory burden is the planned implementation of an information sharing mechanism among the four member agencies, respecting the legal boundaries that are currently in place.
A substantial discussion ensued on consumer protection issues. The Forum identified and discussed some financial investment schemes offering very high returns to unsophisticated investors. It likewise committed to look deeper into the schemes operating in gray areas of regulation and supervision. These notwithstanding, the FSF recognizes that in order to diminish the popularity and the attractiveness of get-rich-quick operations, efforts must also be geared towards improving public awareness by making investors and depositors more conscious of where they put their money. This will be approached through the development of an integrated financial literacy program that will educate the public as regards financial institutions and the basic regulatory framework within which these institutions operate.
Another area of particular interest to the Forum is the establishment of a proper framework for the operation and regulation of financial institutions, particularly those in the business of lending to the public. Many of these lenders are set up as sole proprietorships others as financing companies, neither of which are clearly regulated. The Forum intends to come up with a common position on the appropriate regulatory framework for these entities for recommendation to Congress, which is currently reviewing several proposed bills on lending investors.