BSP plans to grade banks on consumer protection

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is planning a management framework that would rate banks on consumer protection and subject institutions posing greater risks to closer regulatory review.

The central bank is seeking industry comments on a draft order adopting the Financial Consumer Protection Risk-and-Impact Supervisory Model. The framework would assess financial institutions based on their potential to harm consumers and the strength of their consumer protection practices.

It defines consumer harm as any actual, potential financial or nonfinancial harm, including financial loss, unfair treatment, unjustifiable exclusion and poor value for money.

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Under the proposal, the BSP would first rate institutions by consumer impact—low, moderate, above average or high—based on the scale, reach and severity of potential harm from misconduct, operational failures or weak consumer protection practices.

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It would then assess governance, compliance and internal audit arrangements, rating institutional assurance and oversight as strong, acceptable, inadequate or weak.

The BSP would combine both assessments into an overall consumer protection stance: consumer-centric, consumer-attentive, consumer-risk exposed or consumer-harm evident. That rating would determine the intensity of supervision, allowing regulators to focus on institutions with the greatest potential to harm consumers while taking prompt action to strengthen compliance.

“The principles, concepts and processes of the framework apply to all regulated financial institutions, regardless of size and risk profile,” the document read. “It also facilitates the conduct of consolidated supervision, where impact and risks are viewed on a group-wide basis.” /pai INQ

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