TRUST CORPORATIONS will now be allowed to sell unit investment trust funds (UITFs) through individual and institutional agents to level their playing field with banks that have broad distribution networks, the central bank said.

In Circular No. 1097 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno, the central bank outlined the role of branches and marketing officers of trust corporations for the sale of UITFs.

It said individual agents and institutional agents will be allowed to sell trust corporations’ UITFs provided they can comply with the requirements and classifications set out by the central bank.

Currently, trust corporations distribute their UITFs through their main offices.

BSP Deputy Governor Chuchi G. Fonacier said they have been looking into allowing trust corporations to offer their products via individual and institutional agents even before the coronavirus pandemic.

“This will in a way level the playing field as far the as distribution channel is concerned. Trust departments of banks have branches as their distribution channel,” Ms. Fonacier said in a text message.

According to the circular, trust corporations need to be prudent in selecting third-party distributors and make sure they meet qualificatory requirements.

Among these requirements are training programs that were conducted by respective trust entities, the Trust Officers Association of the Philippines or other training providers acceptable by the BSP.

Meanwhile, institutional agents are required to be registered as a corporation with the Securities and Exchange Commission; actively operating; in good financial standing; and need to have secured authority from the appropriate regulatory agency to engage in the distribution of UITFs.

“Consistent with the expectation for the board and senior management to maintain an effective and efficient internal control framework, the trust corporation shall adopt appropriate control mechanisms to ensure the protection of client funds,” the circular said.

The responsibility of knowing customers still lies with the trust corporations, the BSP said, although both individual and institutional agents can conduct client suitability assessment processes and customer identification under existing anti-money laundering and counter-terrorism financing laws. — LWTN