To further strengthen the consumer protection framework, the financial regulators under Republic Act No. 11765 or the “Financial Products and Services Consumer Protection Act” (FCPA) took turns releasing the rules to effectively carry out the provisions of the law.
Early this year, the Securities and Exchange Commission published its draft rules on the financial consumer protection law and asked all interested parties to submit their comments. In March, the Bangko Sentral ng Pilipinas (BSP) issued BSP Circular No. 1169 or the Rules of Procedure for the Consumer Assistance Mechanism, Mediation and Adjudication of Cases in the BSP. In the same month, the Insurance Commission issued, adopted, and promulgated the Implementing Rules and Regulations (IRR) of the FCPA through Insurance Memorandum Circular No. 2023-01.
Under the FCPA and according to its mandate to safeguard the rights and interests of the insuring public, the Commission formulated its standards and rules applicable to specific financial products and services within its jurisdiction. Such financial products and services include insurance, pre-need, Health Maintenance Organizations (HMOs), and digital financial products and services offered and delivered by financial providers and regulated entities.
Termed Insurance Commission-Regulated Entities (ICRE) under the IRR, appropriate mechanisms are imposed on these entities with the aim of reinforcing consumers’ confidence in the financial market and fostering the stability of the Philippine financial system. Towards this end, measures are in place to protect the following rights of financial consumers:
Right to fair and equitable treatment. To ensure every financial consumer is treated fairly, honestly, and professionally at all stages of the transaction, ICREs shall conduct suitability and affordability assessments and ensure fairness of terms and conditions of the financial products and services offered. Moreover, ICRES must evaluate the products and services to make sure that they are appropriately targeted to consumers’ needs, understanding, capacity, and risk appetite.
Right to disclosure and transparency. Among the objectives of the IRR is to ensure adequate consumer protection against unfair business practices. Hence, every financial consumer must have the right to receive clear, concise, and full disclosure of all information relative to a financial product or service that is being offered to them — starting with advertising materials.
ICREs shall ensure that their advertising materials are not false, misleading, or contain deceptive statements or omit key information that may materially and/or adversely affect the decision of the consumer to avail themselves of a service or acquire a product. Regardless of whether it is prepared by them or by their intermediaries, ICREs shall be bound by all statements made in the marketing and sales materials relative to their offered products and services.
Further, all the significant terms and conditions of a financial product or service shall be disclosed by the ICRE to the consumers, as may be applicable: a.) information on risks, return, or possible warnings, b.) any waiver of rights and limitations of liabilities, c.) consumer’s rights and responsibilities, d.) consequences of failure to meet obligations, e.) rights and responsibilities of ICREs, f.) involvement of authorized agents, g.) cancellation of financial product or service, and h.) full price or cost of the financial product or service including all interest, fees, charges, and penalties, and whether they can change over time. The consumers shall be notified of any changes in key features, terms and conditions previously approved by the Commission, at least 30 days before its implementation. Moreover, financial products or services with a coverage period longer than 30 days are required to have a cooling-off or free-look period which enables the consumers to return or cancel the policy or contract.
The financial consumers shall be provided with a copy of each of the documents signed by them immediately after the transaction has been completed. For products or services offered through digital means, ICREs shall provide printed copies of records upon their request.
Right to privacy and protection of client data. Financial transactions and personal data disclosed shall be kept confidential and secured consistent with the provisions of the Data Privacy Act of 2012, its IRR, and other issuances of the National Privacy Commission. ICREs shall also adopt and implement information security standards to ensure the safety and protection of the confidentiality, integrity, availability, authenticity, and non-repudiation of clients’ information and financial transactions.
Right to protection of consumer assets against fraud and misuse. ICREs must provide clear information on the action taken or to be taken about a complaint, inquiry, or request from a financial consumer involving fraud and unauthorized transactions.
Right to timely handling and redress of complaints. In addition to the preceding right, ICRES are required to establish their Consumer Assistance Management System (CAMS) to receive, record, evaluate, resolve, and monitor consumer complaints, inquiries, or requests. A range of consumer assistance channels such as walk-in or personal visits, centralized web portals, mobile applications, social media, letters, e-mails, and telephones must be always made available.
While ICRES may provide for their own periods for addressing consumer concerns, response to inquiries should not be later than the next business day. For complaints or requests, acknowledgment must be made within two working days from receipt. Processing (assessment and investigation) and resolution as well as the communication of the said resolution to the requesting consumer must then be made within nine to 47 working days from receipt of the complaint or request depending on its difficulty or complexity.
As part of the transitory clause, ICREs shall be given a reasonable period to conduct a gap analysis of their current consumer protection practices vis-a-vis the IRR provisions and create an Action Plan duly approved by the ICREs’ Board of Directors to achieve full compliance with the said rules. In no case, however, will the compliance process be longer than one year and six months from the effectivity of the IRR.
Otherwise, failure to comply with the FCPA, its IRR, and other relevant laws and regulations will warrant enforcement and administrative sanctions on ICREs and their directors, trustees, officers, employees, or agents.
The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.
Gillian Ruth A. Grancho is an associate of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW), Davao Branch.
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