The Monetary Board (MB) has liberalized the framework for the cross-selling of financial products by banks. Under the new guidelines, banks may use their premises to market and sell the financial products of their related parties under a banking group or a financial conglomerate.
Cross-selling is an international practice that separates the production of a financial product or service from its distribution. Under the guidelines approved by the MB, bank premises are used as an access point for financial products offered by related parties.
According to BSP Governor and MB Chairman Amando M. Tetangco, Jr., “This reform initiative makes available to consumers a broader array of financial products using the existing branch network of the banking system.”
The new rules now allow all types of banks to perform cross-selling. They also dispense with the submission of product by product documentary requirements under the previous guideline.
While documentary requirements have been streamlined, governance standards have been strengthened. An oversight mechanism specific to cross-selling has been outlined in the new rules. Among others, a complaints handling mechanism has been instituted.
Governor Tetangco noted that, “BSP is cognizant of the need to sustain high standards of risk management. This is the reason why we limit the products to those without investment risk and allow only banks with CAMELS rating of at least 3 to perform cross-selling.”
Banks may now cross-sell credit cards and auto, home mortgage, personal and other retail loans; term, life, non-life and other protection-type insurance products; cash, debit and related products; and other similar financial instruments that may be authorized by the MB.