Senate bill on protection of financial consumers up for plenary debates

MANILA, Philippines — A proposed law that would protect the interest of financial consumers amid the “rapid expansion” of the country’s online banking systems is now up for plenary deliberations in the Senate.

During Tuesday’s session, Senator Grace Poe, chairperson of the Senate banks committee, endorsed for plenary approval Senate Bill No. 2488 or the proposed Financial Products and Services Consumer Protection Act (FCPA).

“The rapid expansion of our online financial systems—no doubt accelerated by the pandemic—also became a fertile ground for many fraudsters, hackers, and unscrupulous individuals to scam people out of their money,” Poe said in her sponsorship speech.

In sponsoring the bill, Poe recalled the recent online banking fraud that hit some 700 clients of BDO Unibank Inc. last December.

READ: NBI nabs 5 in hacking of 700 bank accounts

“This happened to one of the largest and most established banks in the country. Yet, thieves found ways to infiltrate the system and depositors were made defenseless in the face of such massive breach,” the senator said.

She also pointed to the investment scheme that “gained popularity” in Bohol, Davao, Bukidnon and other parts of Visayas and Mindanao.

“Their promise of at least 40-percent interest rate of return in as short as two weeks attracted many, who saw this as the ultimate opportunity to secure their future,” she said.

“Hundreds of millions of pesos were lost in what was declared to be a classic Ponzi Scheme by Securities and Exchange Commission (SEC), and many heartbroken families and investors were left to wonder if they will ever gain back the money that was taken from them,” she added.

“These incidents of fraud are neither novel nor rare. In fact, these stories continue to multiply as our financial system furthers its expansion through all mediums,” she further said.

In the last two years, Poe noted that the Bangko Sentral ng Pilipinas (BSP) received more than 42,000 complaints through its Consumer Assistance Mechanism.

In 2021 alone, the total amount involved in the complaints added up to P540 million.

READ: Over 42,000 financial transaction complaints lodged before BSP in 2020, 2021

“These are staggering amounts considering that these are from personal deposits of ordinary Filipinos,” she said.

Poe said the proposed law covers a “full range” of financial products and services offered by banks, insurance companies, health maintenance organizations, investment advisers, relevant cooperatives, and other corporations and financial institutions.

Under the bill, these entities will be overseen by their respective financial regulators such as the BSP, SEC, the Insurance Commission, or the Cooperative Development Authority.

The bill seeks to capacitate financial regulators to enable them to monitor markets and require the submission of necessary reports and data.

If enacted, the measure also grants them the authority to restrict the collection of excessive or unreasonable fees by service providers, to suspend the operation of any supervised financial service provider, and the power to issue a cease-and-desist order under certain circumstances, according to Poe.

It would enable the regulators to “resolve the challenges faced by the financial consumers in a timely manner through its power,” she noted.

The bill also requires financial service providers to implement measures such as the “determination of suitable financial products, reasonable pricing, provision of a cooling-off period to give consumers enough time to reflect before purchase; and adoption of disclosure principles, including the use of clear and concise language to ensure that the consumer understands the transaction.”

Poe further assured that the bill considers the consumers’ data privacy. Under the bill, financial service providers are asked to enforce the Data Privacy Act, and to “ensure that they have a well-trained, well-equipped cybersecurity mechanism that would deter future attacks.”

“Aside from the required consumer protection assistance mechanism on the part of both the financial service provider and financial regulator, the financial regulators are now also equipped with adjudicatory powers for reimbursement of money within a certain threshold,” Poe also said.

“This would declog court dockets and give immediate relief to the ordinary consumers who simply cannot afford to wait for months to get their money back,” she added.

Investment fraud

According to Poe, the bill also penalizes investment fraud on top of the other penalties already existing under other laws.

“These scams bring only devastation and hardships to their victims, and as such, should be deterred at all costs,” she said.

Additionally, Poe said the measure provides for appropriate criminal and administrative penalties “to ensure proper compliance with its mandates.”

“The financial regulator may likewise file an independent civil action on behalf of the aggrieved financial consumers for the protection of their rights as well as for public interest,” the senator said.

She then expressed hopes that the bill will “instill trust and confidence in our financial system.”

“As this Congress nears the end, let us be remembered as not only the Congress that faced the colossal challenges of the pandemic, but also the Congress that found ways to advance the welfare of the financial consumers,” Poe added.