AMONG his last acts as chief executive, President Duterte signed into law a measure requiring financial service providers to strengthen mechanisms for protecting what the bill’s main sponsor described as “financial consumers’ rights to redress, information and privacy.”
Duterte signed Republic Act (RA) No. 11765 or the Financial Products and Service Consumer (FPSC) Act, which will regulate financial service providers (FSP) and “investment providers” and giving regulators more muscle to run after the errant players.
The new law tasked the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Insurance Commission (IC), and the Cooperative Development Authority (CDA) to regulate FSPs.
The so-called financial regulators will have the power to craft policies and conduct market surveillance and examination for FSPs.
It could also impose restrictions on FSP which collect excessive and unreasonable interests, fees or charges, including all other interests, fees and charges covered under RA 10870 or the Philippine Credit Card Industry Regulation Law.
Regulators were also allowed to sanction FSP, which violated the provisions of RA 11765 by disqualifying and/or suspending its executives or workers, imposition of fines or penalties, issuance of cease and desist order.
BSP and SEC were authorized to adjudicate civil cases of a financial consumer for a sum not exceeding P10 million.
The decision of both bodies will be final and executory and may not be restrained or set aside by court except on petition on certiorari on the ground of grave abuse of discretion, or lack or excess of jurisdiction of the financial regulators.
Any petition certiorari related to FSPs may be filed before the Court of Appeals.
Financial regulators will set up a consumer redress for complaints handling mechanism to address the disputes between financial consumers and FSPs.
Poe hails signing
Senator Grace Poe, main sponsor of the measure as the chairman of the Committee on Banks and Financial Institutions, hailed Tuesday the timely signing into law of the FPSC Act.
“At the core of the law are protection and reinforcement of the Filipino,” Poe pointed out, adding that “we expect financial service providers to establish and strengthen existing mechanisms to immediately assist consumer complaints, requests or inquiries and provide status on courses of action.”
The senator noted that the law arms regulators with sufficient authority in effectively preventing fraud and timely addressing consumer issues, especially as more turn to digital services.
“They are empowered to conduct market surveillance and examination, carry out market monitoring, formulate their own rules, and impose sanctions, including suspension of operations of financial service providers and reimbursement of lost money,” Poe added.
She recalled that “we authored this measure and saw its passage through as its sponsor to ensure heightened level of protection for all consumers,” stressing that “transactions, big or small, deserve quality and prompt attention.”
“We must never let our people agonize on where their money went,” the senator stressed, adding that “inspiring trust and confidence in the system will lead us to our goal of greater financial inclusion.”
Financial regulators will come out with the implementing rules and regulations for RA 11765 within one year from its effectiveness.
Under RA 11765, investment advisers or “any person, who for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value investments products or as to the advisability of investing in, purchasing, or selling investment products” will be covered by regulation of the SEC.
Those, who will be exempted from the regulation for “investment advisers” are trust department/unit of banks; stand-alone trust entities; lawyer, accountant, engineer, or teacher, whose performance of such services is solely incidental to the practice of his profession; insurance agent, whose performance of such services is solely incidental to the practice of his profession; any investment banker or broker dealer, whose performance of such services is solely incidental to the conduct of his business; publisher of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; other persons as the SEC may designate by rules and regulations, or appropriate order.
Any violation of RA 11765 will be sanctioned with imprisonment of one year to five years and be fined P50,000, but not more than P2 million.
The new law will take effect 15 days after its publication in the Official Gazette or in at least two newspapers of general circulation.
With Butch Fernandez