A LEGISLATOR has filed a bill seeking to provide a regulatory framework for consumer financial protection and to institutionalize the Bangko Sentral ng Pilipinas’ (BSP) Financial Consumer Protection Department.
Rep. Jose Maria Clemente S. Salceda of Albay, who is also the Chairman of the House Committee on Ways and Means, filed House Bill 5976 Tuesday, which if passed will be known as the Comprehensive Consumer Financial Protection Act.
The bill retains the basic framework included in House Bill 9054 filed during the 17th Congress which could give financial regulators the abilities of rulemaking, surveillance and inspection, market monitoring, and enforcement powers relative to consumer protection.
House Bill 9054 was passed in the House of Representatives during the 17th Congress but was not ultimately enacted into law.
In addition to the framework, the bill also seeks to create the Financial Stability Oversight Coordinating Council (FSOCC) “which shall be a body for coordination among the regulators to address all potential threats to the financial system and provide a broader, inter-agency venue for financial stability.”
“The FSOCC will also expand the reach of our prudential laws to ensure that our regulatory structures are not limited by the lack of jurisdiction of the Monetary Board. The FSOCC will also empower the Monetary Board to regulate firms which the Council deems to be significant enough to impact the country’s financial stability” Mr. Salceda said in the bill’s explanatory note.
The measure also seeks the institutionalization and expansion of the Financial Consumer Protection Department to enforce “fair and truthful lending” and mandate the coverage of non-depository institutions.
Meanwhile, to protect investor rights and boost investor confidence, the bill also seeks to create the Office of the Investor Advocate which will be under the Security and Exchange Commission.
Mr. Salceda said that the bill complements other fiscal, economic and financial reforms, particularly the Corporate Income Tax and Incentives Rationalization Act (CITIRA), the Passive Income and Financial Intermediaries Tax Act (PIFITA), the Virtual Banking Act, and the amendments to the Public Services Act (PSA), the Foreign Investments Act (FIA), and the Retail Trade Liberalization Act (RTLA).
CITIRA aims to gradually cut the corporate income tax rate to 20% from the current 30%, was approved on third and final reading at the House of Representatives on Sept. 13. It is also one of the four packages of the Comprehensive Tax Reform Program (CTRP).
PIFITA is also one of the packages under the CTRP which was passed by the House on third reading in September.
The measure aims to decrease the tax rates on interest income from savings and short-term deposits to 15% from the current 20%. Tax rates on interest income from foreign currency deposits and long-term deposits will also be lowered to 15%.
Mr. Salceda filed the Virtual Banking Act on Jan. 6 which seeks to provide a regulatory framework for virtual banks.
FIA was passed by the House in September, while the PSA and RTLA are still pending at plenary level.
“With the increase in investments (especially retail investments) that these reforms will trigger, this representation sees the need for a financial services regulatory framework that not only deals with current gaps for current problems, but also proactively anticipates future issues in the financial sector” Mr. Salceda said. — Genshen L. Espedido
