The World Bank (WB) cited the financial consumer regulatory environment in the domestic banking system in its “Republic of the Philippines: Diagnostic Review of Consumer Protection in the Banking Sector” that was published recently in the WB website.
In the review, the multilateral lender said, “There is an impressive focus on consumer protection in the banking sector in the Philippines.”
The WB said this finding is manifested through the wide range of laws and regulatory instruments issued by the Bangko Sentral ng Pilipinas (BSP) relating to such subjects such as Truth in Lending for loan products, credit cards, microfinance, electronic banking, investment products, responsible lending practices, confidentiality and data protection, cross selling of products, outsourcing of bank functions and compliance systems.
The WB review also indicated that the “Philippines compares well with other economies on its approach to consumer protection in the banking sector (although there is no “international best practice” in the strict sense given the importance of the country context).”
According to the WB, “This view is supported by comparing the position of the Philippines to that of 114 other economies surveyed in the 2013 Global Survey on Financial Consumer Protection.”
The WB conducted the diagnostic review for the Philippines at the request of the BSP. To gather data, the WB mission met with representatives of the BSP and other government agencies; banks; non-banks; organizations representing financial industry entrepreneurs and consumers; and legal experts.
The WB looked into institutional arrangements; the legal and regulatory framework; transparency and disclosure; business practices; complaints handling and dispute resolution mechanisms; and consumer awareness and financial literacy.
Aside from the findings, the WB gave recommendations on enhancing the country’s financial consumer protection regulatory environment. The BSP, noted, however, that the Monetary Board’s initiative to formalize the Consumer Protection Framework for the banking system has been a step in the right direction because it substantially addressed said recommendations prior to the release of the findings.
The BSP promotes consumer protection and financial literacy under its broader Financial Stability agenda. According to the BSP, financially-educated citizens capable of protecting themselves against financial frauds are essential to Financial Stability.
The diagnostic review can be viewed at http://responsiblefinance.worldbank.org/diagnostic-reviews