In light of the increased complexity of financial products and rapid technological innovations in financial products and services, the Monetary Board has approved the revision of the BSP Regulations on Financial Consumer Protection Framework under Circular No. 857 issued in 2014.
The new Circular seeks to fundamentally strengthen market conduct practices of BSP supervised financial institutions (BSFIs) by establishing guidelines that institutionalize consumer protection as an integral component of corporate governance and culture, as well as risk management.
This is part of the Bangko Sentral ng Pilipinas’ (BSP) commitment to promote broad and convenient access to high quality financial services and consider the interest of the general public, as mandated by its amended charter. In doing so, the BSP aims to ensure that financial service providers conduct ethical business practices and do not engage in practices that may cause harm to the consumer in the conduct of their business.
The new Circular also espouses principles-based consumer protection regulations that are aligned with the BSP’s risk governance and compliance frameworks and consistent with international practices and standards. Also taking into account the emerging risks associated with digital financial products and services, the Circular provides flexibility for the BSFIs to strategize its consumer protection approach commensurate with its business model, corporate structure and risk profile.
The new Framework retains the five consumer protection standards of conduct, i.e., disclosure and transparency, protection of client information, fair treatment, effective recourse mechanism, and financial education and awareness. In addition, the new Framework emphasizes, among others, that BSFIs should not employ practices that discriminate or take advantage of vulnerable groups such as low income earners or persons with disability.
To facilitate transition, banks are to perform a gap analysis of their current consumer protection practices in relation to the new rules and to propose an action plan duly approved by the Board of Directors to comply therewith.