BSP to boost supervision of consumer protection

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) proposed rules that would establish financial consumer protection as a standalone area of supervision, allowing examiners to separately assess how banks and other regulated firms treat customers.

The proposed framework will give the central bank wider enforcement powers.

READ: BSP plans to grade banks on consumer protection

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Under a draft circular released for industry comment, the BSP will adopt financial consumer protection as a “distinct, risk-based supervisory function” across all of its supervised institutions.

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The framework will allow the central bank to conduct both onsite and offsite surveillance and examinations of banks and other regulated firms, independent of its traditional prudential supervision.

Examiners will evaluate whether financial firms comply with consumer protection rules and whether their governance, risk management, internal controls, products, services, digital channels, third-party arrangements and business practices adequately safeguard customers.

The reviews will also assess whether firms are preventing consumer harm and delivering financial products and services in a fair, transparent and responsible manner.

The proposal will also strengthen examiners’ investigative powers.

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Officials leading the BSP’s consumer protection supervision unit and authorized examiners could administer oaths to directors, officers and employees during examinations.

That could also require supervised institutions to produce books, records, documents and other information deemed necessary to determine compliance with consumer protection laws and regulations.

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The BSP may also obtain relevant data or information on financial products, services, markets, consumer outcomes and related matters from other government agencies.

READ: BSP eyes tighter liquidity, recovery rules for e-money issuers

The draft rules will give the central bank broader enforcement tools against institutions found to have violated consumer protection requirements.

These include the disqualification of responsible officers and directors and the imposition of fines and other penalties. It also allows the issuance of cease-and-desist orders without a prior hearing when the BSP determines that an act or practice amounts to fraud, violates regulations, or could cause grave or irreparable harm to consumers.

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The BSP will also be empowered to suspend the operations of a supervised institution involving a particular financial product or service if it determines that the institution is violating applicable laws, rules or regulations. INQ