Banks given a year to adjust systems

MANILA, Philippines - Banks and other financial institutions have been given a year to tweak their systems and incorporate the new Consumer Protection Framework, the Bangko Sentral ng Pilipinas said.

Circular 857, signed Nov. 21 by BSP Governor Amando M. Tetangco Jr., indicated that the periodic assessment for banks and other financial institutions’ consumer protection practices will also be issued a year after the effectivity of the new measure.

The framework details how financial institutions should deal with their customers on disclosure and transparency, protection of client information, fair treatment, effective recourse, and financial education.

The BSP has required banks and other supervised firms to ensure consumers have “reasonable” understanding of the products and services they may be availing of.

As such, clients should be given adequate time to review the term and conditions of products and services prior to signing any contracts or executing any transaction.

At the same time, “financial consumers have the right to expect that their financial transactions, as well as relevant personal information disclosed in the course of a transaction, are kept confidential.”

Banks and other BSP-supervised institutions should ensure they have a secure database, and a periodically re-validated procedures in handling information, among others, the central bank said.

The fair treatment objective, meanwhile, makes certain that consumers are not sold inappropriate or harmful financial products and services.

The BSP said financial institutions should have in place monitoring and control mechanisms to protect the best interests of their consumers.

The BSP will periodically assess efforts of banks and other regulated institutions in complying with the framework. On-site assessment, off-site surveillance, market monitoring, and other practices will be done to evaluate the banks.

Sanctions will be given for those unable to comply which include fines, the termination or suspension of new operations or products, the withdrawal of advertising or marketing materials, and the submission of additional reports for monitoring.