Financial regulators are throwing their full support to the Financial Consumer Protection Act—now pending with the Senate— in view of mounting complaints filed against cyberthieves and data theft and online scams.
WITH P2 billion in consumer complaints involving cybercrimes from 2019 to 2021, the Bangko Sentral ng Pilipinas and Securities and Exchange Commission are backing the Financial Consumer Protection Act.
The proposed law covers all financial products and services; institutionalizes consumer protection standards; and promotes transparent and responsible pricing, fair and respectful treatment of clients privacy, and client data protection.
BSP Governor Benjamin Diokno said the central bank and SEC, Insurance Commission and Cooperative Development Authority are closely coordinating with the Senate for the immediate passage of the proposed law.
The BSP is pushing for the enactment of a law that aims to enhance consumer protection as the number of complaints continues to grow amid the complexity of financial products and services as well as the increased adoption of digitalization in the country.
“The Financial Consumer Protection Act is a timely reform amid the growing complexity of financial products and services in the country and is aligned with BSP’s commitment to promote digitalization and protect financial consumer welfare,” Diokno said.
In promoting the digitalization of financial services, Diokno said the BSP is supporting the passage of the law that will provide consumers legal protection “as they explore the opportunities and face risks associated with the evolving financial landscape.”
The FCPA was approved in June 2021 by the House of Representatives on third and final reading (HB6768) while Senate Bills 60, 534, 1329, 1335, 1739 and 2287 have also been filed and referred to the Senate committee on banks, financial institutions and currencies. A sub-committee headed by Sen. Sherwin Gatchalian was tasked to deliberate on these bills.
“The legislative measure empowers financial regulators to take necessary actions against financial entities performing acts that may undermine consumer welfare and provides a redress mechanism. This is seen to further strengthen the trust and confidence of the public in the financial system,” he said.
It gives financial regulators the authority to issue rules and regulations that will ensure consumer protection; conduct hearings on consumer complaints; and enforce action such as restriction on the imposition of excessive or unreasonable interests, fees or charges.
Diokno pointed out the BSP processed about 12,000 complaints coursed through its regular complaint channels or the automated chatbot BSP Online Buddy (BOB) in the first half of the year.
Complaints and queries processed through BOB represented 58 percent of total cases during the second quarter of 2021. This is almost four times higher than the 15 percent BOB usage rate during the third quarter of 2020.
“The increased usage suggests the effectiveness of BOB in providing consumers with an accessible and efficient platform for escalating complaints regarding the products and services provided by BSP-Supervised Financial Institutions,” Diokno said.
Customer satisfaction data from the 2020 BOB feedback portal indicated that 69 percent of respondents were satisfied with the service of the chatbot.
According to a survey by Silicon Valley-based data analytics firm Fair Isaac Corp. almost six out of 10 Filipino consumers prefer to use digital and mobile channels in transacting with their banks.
Diokno pointed out only three percent or 358 concerns filed from January to June this year pertained to debt collection or debt restructuring of loans and credit card accounts.
Of the total debt restructuring and affordable payment arrangement filed with the BSP chatbot, Diokno said around 31 percent was resolved in favor of the consumer and another 32 percent are still for evaluation and coordination with the client.
He added that 21 percent are still awaiting action or reply from the concern BSP-supervised financial institutions.
“Complaints that were not resolved in favor of the client comprise only of 13 percent of the total number. So based on the given number, it is apparent that consumers and financial institutions do their direct coordination and find common ground in negotiating their obligations,” he said.
The proposed Financial Consumer Protection Act (FCPA) will provide government agencies and financial regulators with the legal authority to enforce prudent, responsible, and customer-centric standards of business conduct, said BSP Governor Benjamin E. Diokno during a Senate Committee on Banks, Financial Institutions and Currencies hearing on Monday.
The measure will provide consumers with more efficient avenues for redress by granting regulators, including the BSP and the Securities and Exchange Commission (SEC), with adjudicatory authority to conduct hearings on consumer complaints.
“Consumer complaints can be escalated and resolved at the level of the financial regulators, ensuring quick resolutions, hence de-clogging court dockets,” Diokno told BusinessWorld.
He said 42,456 complaints were elevated to the BSP Consumer Assistance Mechanism in 2020 and 2021. “A majority of these cases have been deemed closed, but the process was long and arduous and for many complaints, the resolutions were unfavorable to the consumer,” he said.
SEC Commissioner Ephyro Luis B. Amatong said the regulator issued 241 advisories, 20 cease-and-desist orders, and 14 orders of revocation of certificates or registration against firms during the pandemic.
“Among the serious challenges encountered in the prosecution of criminal cases against these scammers is the lack or absence of complainants who are willing to stand as witnesses in these cases,” he said during the same hearing.
“Unlike in the US (United States) where the SEC which has the express authority to compel the return of funds obtained by violators of securities laws as part of their enforcement action, our Securities Regulation Code does not provide for a similar authority for our commission.”
Amatong said this means that victims of investment scams have to file estafa cases on their own to recover their money.
Under the proposed FCPA, the SEC can file cases to recover the funds for and on behalf of the victims of investment scams and issue an order directing scammers to return the investments of their victims.
The measure also proposes to give the SEC the authority to supervise and regulate investment advisers.
Amatong called this an “additional layer of investor protection” as it ensures only qualified and licensed persons may provide investment advisory services for a fee or for compensation thus “eliminating the observed modus of scammers posing as so-called investment gurus.”
“Without doubt, if properly and swiftly implemented, this act will reinforce the trust and confidence of the public in the financial system, and in the government’s ability to uphold consumer welfare,” said Mr. Diokno.
Senator Mary Grace Natividad S. Poe-Llamanzares, chairman of the Committee on Banks, Financial Institutions and Currencies, is seeking to sponsor the proposed measure at the plenary next week.
Poe-Llamanzares authored Senate Bill 1739 or the proposed FCPA, which will cover all financial products or services developed or marketed by financial service providers, such as savings, credit, insurance, and remittances.
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