The Bangko Sentral ng Pilipinas (BSP) has outlined proposed regulations for financial consumer protection (FCP) supervision and enforcement, which could lead to administrative sanctions for banks and other financial institutions that fail to comply.
The BSP is set to implement Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA), which aims to protect customers of financial institutions. The central bank has outlined a range of sanctions that institutions could face for FCPA violations, including the disqualification or suspension of directors, trustees, officers, or employees if proven to be negligent.
In addition to fines and penalties, the BSP can also issue cease-and-desist orders without prior hearing if an institution's act or practice constitutes fraud, breaches the FCPA, or may cause grave harm to financial consumers. Financial institutions may defend their case by requesting a summary hearing before the BSP, but the central bank's decision is deemed final if the violator does not file for a hearing.
The BSP is adopting a risk-based supervisory function to ensure compliance with the FCPA. The central bank will conduct online or on-site surveillance and examination of institutions' compliance with the FCPA and its implementing rules and regulations. The BSP said that financial consumer protection supervision is a distinct, risk-based supervisory function designed to safeguard the interests of financial consumers and promote transparency and fair market conduct.
The BSP will use the Financial Consumer Protection Risk-and-Impact Supervisory Model (FCPRISM) to assess banks' compliance with the FCPA. The framework has a risk-based approach, with the level of supervisory engagement depending on a bank's consumer impact and consumer protection risk profile. Institutions with greater potential to cause consumer harm will be supervised more closely.
The BSP will evaluate if a bank ensures "fair, transparent, responsible, and responsive" delivery of financial products and services. The central bank may conduct FCP compliance examinations separately from prudential regulations compliance at any time during business hours upon request. Under the proposed regulations, banks must submit all relevant documentation to ensure they are managing FCP risks effectively.
