BANGKO SENTRAL NG PILIPINAS

OFFICE OF THE GOVERNOR

CIRCULAR NO.1160
Series of 2022

Subject: Regulations on Financial Consumer Protection to lmplement Republic Act No.

11765, otherwise known as the "Financial Products and Services Consumer
Protection Act"

'The Monetary Board, in its Resolution No. 1683 dated 17 November2022, approved the
adoption of the Amended Regulations and Cuidelines on Financial Consumer Protection (FCP)
Framework to implement Republic Act No. .|.|765 or the Finonciol Products ond Seryices
Consumer Protection Act (FCPA), and accordingly approved the amendments of the relevant
provisions of the Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-
Bank Financial Institutions (MORN BFI).

Sectionl. PartTenoftheMORB/MORNBFlareherebvamendedinitsentiretvandshall
now read, as follows:

PARTTEN

FI NANCIAL CONSUMER PROTECTION REGULATIONS

roornool-Q FTNANCTAL coNsuMER PROTECTTON FRAMEWORK (FRAMEWORK)

Policy Stotement lt is the policy of the Bangko Sentral to ensure that

appropriate mechanisms are in place to protect the interest of consumers of financial
products and services under the conditions of transparency, fair and sound market
conduct and effective handling of Financial Consumer disputes, aligned with global
best practices. Towards this end, in line with its responsibility under Section 3 of
Republic Act (R.A.) No. 7653 as amended, to promote broad and convenient access to
high quality financial services and consider the interest of the general public, the
Bangko Sentral adopts the Framework to implement R.A. No. 11765 otherwise known
as the Finonciol Products ond Services Consumer Protection Act or FCPA. fhe
Framework shall implement measures to protect the following rights of Financial
Consumers:

o. Right to equitable and fair treatment;

n Right to disclosure and transparency of financial products and services;
Right to protection of consumer assets against fraud and misuse;
d. Right to data privacy and protection; and
Right to timely handling and redress of complaints

The Framework establishes the guidelines and expectations from Bangko

Sentral-Supervised lnstitutions (BSls) to institutionalize consumer protection as an
integral component of corporate governance and culture as well as risk management.
The objective of the Framework is for BSls to manage risks and potential harms to
Financial Consumers, prevent unfair business practices, achieve fair and beneficial
consumer outcomes and empower Financial Consumers to make better and informed
financial decisions. These mechanisms reinforce confidence in the financial market and
foster the stability of the Philippine financial system.

Scope and Applicobility. The Framework shall apply to all financial products or
services created, developed, offered or marketed by a BSl. The BSls' adoption of the
Framework shall be proportionate to their asset size, structure, nature of products and
services, and complexity of operations.

Definition of Terms.As used in this Framework, the following terms shall mean:

Bongko Sentro/-Supervised lnstitution (BSl) - refers to a person, natural or

juridical, that provides financial products or services under the jurisdiction
of the Bangko Sentral, as provided in existing laws, rules and regulations.

b. Electronic Fund Tronsfer (EFT) - refers to transfers of funds between two

accounts in the same or different BSls which are initiated and received
using electronic devices and channels to transmit instructions. For
purposes of the FCPA and its lmplementing Rules and Regulations (lRR),
this term is synonymous to electronic payment and includes remittance
tra nsactions.

a Erroneous Tronsoction - refers to EFTs sent to an incorrect beneficiary

account due to erroneous encoding of beneficiary account number and/or
amount by the sender.
d
Finonciol Consumer or Client - refers to a person or entity, or their duly-
authorized representative, who is a purchaser, lessee, recipient or
prospective purchaser, lessee, or recipient of financial products or services
of BSls. lt shall also referto any person, natural or juridicalwho had or has
a current or prospective financial transaction with a BSI pertaining to its
financial products or services.

Finonciol Consumer Comploint - refers to an expression of dissatisfaction

submitted by a Financial Consumer against a BSI about a financial product
or service of a BSI and/or rts authorized third-party agent or representative,
in which a response or resolution is expected.

Finonciol Product or Service - refers to financial products or services

created, developed and/or marketed by a BSl. These include, but are not
limited to deposits, investments, fund transfers, trust products, loans,
payments, remittances and digital financial products or services which
pertain to the broad range of financial services accessed and delivered
through digital channels. These include products that are authorized to be
cross-sold by BSls.

9. Morketing -refers to the act of communicating, offering, promoting,

advertising, or delivering of financial products or services by BSls.

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n. Originoting Finonciol Institution (OFI) - refers to a BSI that sends EFTs to
another BSl. lt holdsthe source account.

Privocy lmpoct Assessment - refers to an instrument for assessing the

potential impacts on privacy of a process, information system, program,
software module, device or other initiative which processes personal
information; and in consultation with stakeholders, for takinq actions as
necessary to treat privacy risk.

j Product Oovernonce - refers to the systems, procedures and controls in

place to design, approve, distribute and assess financial products.

K. Public Notlce - refers to a notice providing information for the public that
is widespread throughout alltypes of media.

t. Receiving Finonciol lnstitution (RFl) - refers to a BSI that accepts EFTs from
an OFl. lt holds the beneficiarv account.

m. Responsible Pricing - refers to the pricing, terms, and conditions of

financial products or services that are set in a way that is both affordable
to Clients and sustainable for BSls by taking into account, among others,
Client needs, the pricing schemes of competitors and publicly available
information on competitive pricing which conforms to existing laws, rules
and regulations.

n. Stotement of Account or Billing Stotement - refers to the periodic

statement provided to the accountholder, which contains a listing of the
transactions, purchases, payments and other debits or credits on the
account, and the balance within the billing cycle or prescribed period.

o. Third-Porty Agent or Representotive - refers to a qualified service provider

duly-authorized and/or contracted by the BSI to perform designated
activities on its behalf, in accordance with existing Bangko Sentral
regulations.

p. Unouthorized Tronsoction - refers to any transaction initiated by any

person without the actual or imputed knowledge and consent of the
account owner or holder.

q. Vulneroble - refers to the poor and/or transient poor, children, women,

persons with disabilities (PWDs), indigenous peoples, overseas Filipinos
and their families, and older persons. Persons who face economic risks
such as low and irregular incomes, financial and economic crises or risks
brought about by environmental and natural hazards, and governance
and political risks are also deemed vulnerable.

Page 3 of 26
 I,
I

rooznoo2-Q DUTTES OF BSts AND AUTHORTZED THTRD PART|ES

Consumer Protection Risk Monogement System (CPRMS). A BSI should have

a CPRMS that is integrated into the BSI's enterprise-wide risk management processes
and risk governance framework. The CPRMS includes the governance structure,
policies, processes, measurement and control procedures to ensure that Financial
Consumer protection-related risks are identified, measured, monitored, and mitigated.
A carefully devised, implemented, and monitored CPRMS provides the foundation for
ensuring the BSI's adherence to Consumer Protection Standards of Conduct
(Standards) in reference to Sec. lOO3f OO3-Q of this Circular and compliance with the
FCPA and relevant laws, rules and regulations, thereby, ensuring that identified risks to
the BSI and associated risks of financial harm or loss to Financial Consumers are
properly managed.

The CPRMS and Financial Consumer Protection Assistance Mechanism

(FCPAM), in reference to Sec. lOO3/'loO3-Q of this Circular should ensure systematic
application of policies and procedures, including the Standards.

Board ond Senior MonagementOversight The Board of Directors (Board) and

the members of Senior Management of BSls shall provide the means by which they
shall identify, measure, monitor, and mitigate Financial Consumer Protection (FCP)
risks inherent in their operations, in accordance with the Standards and all other
applicable laws, rules and regulations.

a. Responsib ilities of the Boord. The Boardr shall be primarily responsible for
approving and overseeing the implementation of the BSI's CPRMS. The
Board's responsibilities shall include the following:

' (1) Approve the CPRMS and FCPAM that take into consideration the
BSI's business model, market, product lines, and relationships with
third parties that may give rise to risks to Financial Consumers;
(2) Promote a culture of ethical behavior and ensure adherence to the
Standards and all relevant laws and regulations;

(3) Provide adequate resources and adopt policies to effectively

implement training and competency requirements for officers and
personnel, authorized representatives or any other party acting on
behalf of the BSI;
(4) Approve a policy on remuneration and compensation packages
structured to encourage responsible business conduct, fair
treatment and avoidance/mitigation of conflicts of interes! and
performance review which includes provisions for incentives on
positive reviews/assessment that could also serve as basis for renewal
of contract of third-party service providers;

(5) Approve product oversight and governance mechanisms designed

to ensure that financial products or services meet the needs of
I lf there
is no Board of Directors, the equivalent highest-ranking body or officer (if a single individual) is required 1o discharge
these requirements. Likewise, the next highest body or officer will be the equivalent of Senior Management.

Page 4 of 25
 Financial Consumers in target markets or market segments, as well
as universal products
which are simple to access so as not to exclude
vulnerable groups;

(6) Adopt a policy on the imposition of any fees and/or charges of the
BSI's financial product or service which shall include among others,
the basis and quantitative support for the setting of the fees/charges
and rationalization of the fee structure or amount;

(7 ) Approve and periodically review a Code of Conduct applicable to all

BSI directors, officers, staff and third-party agents. The Board shall
define the BSI's corporate culture and values. lt shall establish
standards of conduct and ethics and shall institutionalize a system
that will allow reporting of concerns or violations to an appropriate
body; and

(8) Review periodically the implementation and effectiveness of the

CPRMS, including how findings are reported and whether the audit
mechanisms are in place to enable adequate oversight; and put in
place a regular mechanism to review the relevance of the CPRMS in
case of changes in the BSI's business model and/or operating
environment.
l-\ Responsibilities of Senior Monogement. The Senior Management shall be
responsible for ensuring that the practices of the BSI and their third-party
agents/representatives are aligned with the BSI's approved FCP policies
and risk management system; and consistently displayed throughout the
BSI's place of business particularly across all business units that deal
directly with Financial Consumers. In this regard, the Senior Management
sha ll:

0) Ensure that approved CPRMS and FCPAM policies and procedures

are clearly documented and appropriately implemented across all
levels and business units. This includes the responsibility of
identifying the officer which will head the internal complaints
handling unit or handle the implementation and regular reporting
of consumer-related issues to the Board:

(2) Establish an effective monitoring and management information

system to promptly identify, regularly measure, aggregate, and
analyze FCP-related issues to determine the level of Financial
Consumer risks. An appropriate and clear reporting and escalation
mechanism should also be integrated in the risk governance
framework from any area of the BSI to Senior Management and/or
from Senior Management to the Board. The management
information system should be able to:

(a) Provide adequate information on the performance and quality

of the BSI's FCPAM and other internal processes that can
provide relevant information that allows for identification of
emerging Financial Consumer issues and root cause analysis;

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 (b) Determine the level of FCP risk exposure through assessment
of its implementation of the Standards;

(c) ldentify and monitor, in a timely manner, risks that may result
in financial loss of Financial Consumers or result to consumer
detriment. Financial Consumer complaints, data from
consumer redress mechanisms and reports of fraud are kev
indicators to monitor such risks: and

(d) ldentify and assess emerging or increasing FCp-related risks

that affect the BSI's Financial Consumers such as social
engineering schemes, social media monitoring and market
monitoring;
(3) Ascertain that weaknesses in the FCP practices or emerging risks are
addressed and corrective actions are taken in a timely manner;

(4) Ensure observance of expectations and requirements prescribed

under relevant regulations on compliance and internal audit; and

(s) Ensure that adequate information and actions taken are reported to
the Board on a regular basis in terms of the measurement of FCp-
related risks, reports from the FCPAM, compliance with the Standards
and requirements, as well as other material FCP-related
developments that will impact the BSI's Financial Consumers. This
includes the responsibility to put in place an effective system where
reporting lines are established to promptly detect, analyze, and
respond to Financial Consumer concerns and serious infractions.

too3noo3-Q coNsuMER PROTECTTON STANDARDS OF CONDUCT

The Standards are the core principles which BSls must adhere to at all times in
dealing with Financial Consumers, which should be embedded in the BSls' conduct
and culture. These are specific parameters used to gauge the efficiency of a BSI's
CPRMS and FCPAM, modelled after international best practices. The Standaros are:

a. Disclosure a nd Transpa rency;

Protection of Client Information:
c. Fair Treatment;
o. Effective Recourse; a nd
c. Protection of Consumer Assets against Fraud and Misuse

Disclosure ond Tronsporencyi - Under this Standard, BSls must ensure that
their Financial Consumers have a reasonable comprehensive understanding of the
financial products and services which they may be acquiring or availing. In this context,
full disclosure and utmost transparency, to the extent allowed under applicable laws
and regulations, are the critical elements that empower the Financial Consumer to

'Z This Section should be read in conjunction with existing regulations related to disclosure and transparency of key
information on loan and investment products and services, regulations on the conduct of treasury and trust activities of BSls
and regulations governing fees on retail bank product/services and dormant deposit accounts.

Page 6 of 26
make comparisons and informed financialdecisions. This is made possible by providing
the Financial Consumer, through its verified communication channels in traditional
and digital platforms, information that accurately represents the nature and structure
of the product or service, its terms and conditions, as well as its fundamental benefits
and risks.

The standards for disclosure and transparency shall be applicable even to

financial products and services offered electronically, as well as to financial products
catering to different market segments with particular consideration for segments that
may have limited financial literacy.

The BSI demonstrates adherence to appropriate and adequate disclosure and

transparency when:

The manner of disclosure, whether in advertising materials, terms and

conditions, and other forms of communication, is clear, concise, accurate.
understandable and not misleading.

Sufficient product disclosure must be provided before the contracting of

the financial product or service to give the Client enough basis and time for
review. At the pre-contractual stage, information on the type and amount
of fees, charges and interests, as well as the standard terms and conditions,
must be made available to the client through various kinds of
communication channels, including all digital channels. Disclosure of
information on financial products or services should be available to the
public through printed materials, mass media, websites or digital
platforms. For digital financial products and services, the manner of
disclosure should be easily accessible, especially where the terms and
conditions tend to be deeply embedded and hard to access without
scrolling or clicking through multiple screens.

Information should be disclosed and properly documented before and

during a sale of a financial product or service and during key stages of the
relationship with the Financial consumer. BSls must provide the most up-
to-date information at the stages that information will be most useful for
their Client. This requirement includes information provided in
advertisements during the pre-contractual stage, at the point of entering
a contract and during the term of the contract. The terms and conditions
must clearly state whether interest, fees, charges, and penalties can
change over time. clients should also be effectively notified of any changes
or amendments to the terms and conditions at least sixty (60) days prior
to such amendments by public notice, unless the amendments are
directed by the Bangko sentral to take effect immediately or unless
otherwise provided in existing laws, rules and regulations.

Complementary individual notices to a Client shall also be sent within the

same period if the amendments pertain to or will result to fees to be paid
or charged on the account of the Client. The method for computing said
interest, fees, charges, and penalties shall be disclosed consistent with
existing laws, rules regulations. Clients may be allowed to pre-terminate
the contract on the financial products or services availed if they do not
agree with the significant amendments to the terms and conditions as

PageT of 26
 initiated by the BSl, or if they fail to receive any proper notice on the
changes in terms and conditions.

Terms and conditions must contain all significant provisions of the

financial product or service giving prominence to key featuresffacts. The
terms and conditions should contain the following details and possess
these cha racteristics:

(l) Information on risks, return, caveat about the financial product or

service, any waiver of rights and limitations of liabilities except the
rights mentioned under Section .12 of the FCPA, after-sales service,
Financial Consumers' rights and responsibilities, consequences of
failure to meet obligations, rights and responsibilities of the BSl,
involvement of authorized agents, any conflict of interest by BSI staff,
cancellation and product portability, among others.

(2) The above minimum required disclosures shall always be in writing

or available by electronic means. They shall follow a standard format
and written in plain language to provide the Financial consumers
key information and disclosures that will facilitate better
understanding and comparison among the products offered by
different BSls

A BSI shall require its Client to sign the written or electronic

disclosure statement as affirmation of the client's receipt and
understanding of the disclosure statement. A BSI may use any
methodology or procedure that allows the Client to indicate the
intention of authenticating, approving, or accepting an electronic
document, consistent with R.A. No. 8792or the Electronic Commerce
Act of 2OOO, and other relevant laws, rules, and issuances of the
Bangko Sentral. A BSI may opt to draft an individual or separate
disclosure statement for its Client or incorporate the same in the
main tra nsaction ag reement/contract.3

(3) For more complex products, such as but not limited to investment
products, the key features as well as costs and risks shall be
highlighted in a key facts statement or product Highlight Sheet
(PHS). The PHS shall enable comparison with other financial
products and shall be provided at no additional cost. Before the
signing of any contract, the BSI should ensure that the Financial
Consumer has freely signed a statement to the effect that said
Financial Consumer has duly received, read, and understood the
PHS.

d. Advertising materials shall not be false, misleading, or contain deceptive

statements or omit key information that may materially and/or adversely
affect the decision of the Financial Consumer to avail or acquire a financial
product or service. BSls are legally responsible for all statements made in

3
This provision should be read in conjunction with existing regulations on product-specific minimum disclosures under Sec.
612/612-Q of the MORB/MORNBFI on Sales and Marketinq Cuidelines for Financial Products and Sec. 306 of the MORB on
the requirements for Truth in Lending Act (TILA).

Page 8 of 26
 the marketing and sales materials that they produce relative to their
financial products or services.4

In their advertising materials, BSls shall disclose the contact information

of their FCPAM or appropriate internalconsumer assistance unit handling
Financial Consumer concerns or complaints. BSls shall also disclose that
they are regulated, and the advertising materials must identify the
Bangko Sentral as financial regulator.

The terms and conditions, public notices and other communications to

Clients must contain the following:

0) Contact information of the BSI's FCPAM or appropriate internal

consumer assistance unit handling Financial Consumer complaints
or concerns; and
(2) Statement that the BSI is a regulated entity by the Bangko Sentral
and Bangko Sentral's contact information.

Communication of the BSI officers, staff, authorized agents or any other

party acting on the BSI's behalf is conducted in such a manner that Clients
can understand the terms of the contract and their rights and obligations.
Client segments that may have financial literacy limitations or subject to
certain disabilities or infirmities preventing them from reading or
understanding a proposed written contract should be given a clear verbal
explanation of the terms and conditions, as well as its features, risks and
costs, in a language they can understand.

q. Adequate time is given to Financial Consumers to review, ask questions

and receive information to fully understand the terms and conditions prior
to signing the contract or agreement or executing the transaction. BSls
should ensure that documents signed by the Financial Consumer are
completely-filled out and have no blank terms provided, that the Financial
Consumer is not precluded from readily availing of the BSI's financial
product or service and accepting the BSI's terms and conditions, signing
the contract or agreement, or executing the transaction upon his/her sole
discretion. The Financial Consumer should be given a copy of each of the
documents he/she signed including, but not limited to the contract, with
all terms and conditions and/or proof of the transaction, whether printed
or in electronic copy, at the option of the Financial Consumer, or in the
manner or channel through which the product or service was accessed,
immediately after the contract or agreement was executed or transaction
was completed.

Statements of Account or Billing Statements are provided regularly in a

convenient manner to the Financial Consumer, or through the channel
through which the product was sold, commensurate to the type of
product and terms. The statement must bear an official seal and/or
include the letterhead of the BSl. In general, statements for transaction

a This provision should be read in conjunction with the Sales and Marketing Ouidelines for Financial Products; under Sec.
612/612-Q of the MORBiMORNBFI as weil as Appendix e;lQ-4g of the MORB/MORNBFI on the basic standards on the
administration of trust accounts.

Page 9 of 26
 accounts, including loan accounts, with regard to the period covered, and
depending on the type of product, should include the following
information:

(r) the opening and closing balances;

(2) any transactions made during the period, such as but not limited to
deposit, withdrawal, fund transfer, investment, remittance and/or
paymenr;
(3) the merchant or counterpart of each transaction, if any;
(4) details of the interest rate applied to the account, if any;
(s) details of the fees, exchange rate and other charges incurred by the
customer in each transaction, if any; and
(6) any changes applied to the interest rates, charges or fees, if any.

The frequency with which statements are provided should be commensurate

with the type of service and its term, to allow Clients to become aware of anv
una uthorized tra nsactions.

Upon culmination or termination of the contract or agreement, BSls are

required to immediately provide the Financial Consumer with a written or electronic
notice, certification or other closing statement, without need of written or verbal
demand.

Responsible pricing. BSls should establish and follow internal policies and
procedures for setting prices for their products and services, based on, among others,
the principle of responsible pricing. Pricing procedures and documentation should
provide the rationale for why and how prices have been set.

Pricing procedures must consider publicly available information on

competitive pricing, except in special instances of tailor-fit and/or pioneering
products and/or services, the cost to provide the financial product or service and
affordability to Clients, and the reasons for setting the price of each financial product
or service must be duly-documented.

The BSI's pricing mechanism or policy shall adhere to existing laws, rules and
regulations of the Bangko Sentral. BSls may also opt to have their product
governance mechanism assess whether algorithms that influence or determine
pricing may be unfairly biased toward certain groups of people, especiallyvulnerable
segments.

Fqir trestment. BSls shall have the right to select their Clients: Provided, that
they shall not discriminate against Clients on the basis of race, age, financial capacity,
ethnicity, origin, gender, disability, health condition, sexual orientation, religious
affiliation and practice, or political affiliation: Provided, further, that BSls may provide
distinction, as necessary, when making a risk assessment on a specific financial
product or service.

This Standard ensures that Financial Consumers are treated fairly, honestly, and
professionally at all stages of its relationship with the BSl. BSls shall adopt mechanisms
to safeguard the interest of their Clients, which shall include rules regarding ethical

Page 10 of 25
 staff behavior, acceptable selling practices, fair and equitable terms and conditions,
provision of products and services appropriate to the capacity and risk appetite of
Financial Consumers, among others; and incorporate the same in their policies and
procedures, control functions and agreements with outsourced third parties.

The BSI demonstrates the Standard of fair treatment towards Financial

Consumers if its policies and practices observe the followinq:

Terms and conditions are not unfair when there is no significant

imbalance in the parties' rights and obligations under the contract, to the
detriment of the Financial Consumer.

Except where expressly permitted by law, in any agreement with a

Financial Consumer, a term should be deemed as unfair if it exempts or
absolves a BSI from acting with skill, care, diligence, or professionalism
toward the Financial Consumer in connection with the provision of any
product or service, and/or any liability for failing to do so. Ambiguities in
contractual terms and conditions should be construed in favor of the
Financial Consumer.

A term and/or condition is deemed unfair when it includes, but is not

limited to, the following circumstances:

(1) it amends the terms of the contract without adequate notice and/or
without specifying the circumstances in which this may occur and/or
does not provide a right of termination when such amendment
occurs;

(2) it renews a fixed term contract without reasonable notice or

conversely, terminates an open - ended contract without adequate
notice to the Financial Consumer:

(3) it permits the BSI to unilaterally determine whether the contract has
been breached or imposes an unreasonable penalty for a breach of
the contracU

(4) it binds the Financial Consumers to other terms that the Financial
Consumers cannot realistically familiarize themselves with before
the contract is executed, or

(5) it permits the BSI to assign the contract to the detriment of the
Financial Consumers without their consent.

n BSls are prohibited from employing abusive collection or debt recovery

practices against Financial Consumers. BSls or their collection agencies,
counsels and other third-party agents may resort to all reasonable and
legally permissible means to collect amounts due them. However, in doing
so, they must observe good faith and reasonable conduct and refrain from
engaging in unscrupulous or untoward acts.s
s This provision should be read in conjunction with existing regulations on Management Contracts and Outsourcing in Sec.
ll2nll-Q, Appendices 78/Q-65 and lo3/Q-36 of MoRB/MoRNBFI; and on debt recovery or collection practices:uch as Sec.
3Ol/3Ol-Q and Sec.312 of the MORB/MORNBFt.

Page 11 of 26
BSls shall adhere to existing Bangko Sentral guidelines on outsourcing, as
well as relevant laws, rules and regulations. BSls shall ensure that all data
being handled, processed, and/or stored through an outsourcing
arrangement are included in its data inventory and data classification
process. To this end, BSls shall retain exclusive ownership of its Client
records and data already referred to its collection agencies, courrsels and
other authorized third-party agents. BSI's external collection agencies,
counsels or other authorized third-party agents are indispensable parties
in complaints involving unfair collection practices.

The BSI staff and authorized third-party agents or representatives must

treat Financial Consumers with professionalcompetence and in a manner
that is fair and reasonable.

The BSlshall:

(1) Establish a Code of Conduct applicable to all BSI directors, officers,

staff and third-party agents, setting forth the organizational values
and standards of professional conduct that uphold protection of
Financial Consumers, appropriate to its structure, operations, and
risk orofile.

(2) Align its recruitment and training policies around professional, fair
and responsible treatment of clients, compliance with FCP
requirements, and mitigation of consumer risks, for instance:

t:l BSI staff and third party-agents or representatives must

receive adequate training suitable for the complexity of the
fina ncial prod ucts or services they sell to ensure u nderstanding
of their key features, risks, terms and costs, relevant FCP
standards and requirements, including statutory and
regulatory requirements and related internal policies and
procedures that might impact their Financial Consumers,
including those pertaining to consumer risks arising from
cybersecurity and/or digital financial products and services.
Aside from trainings for frontline service personnel, trainings
shall also be made available to compliance and internal audit
officers and staff.

(b) BSI staff, as well as authorized third-party agents or

representatives contracted for sales and marketing purposes,
do not use deceptive or high pressure/aggressive sales
techniques and should not force clients to sign contracts or
rush into a financial deal without the benefit of shopping
around.

(c) BSI staff involved in collections, as well as authorized third-

party agents or representatives contracted for the purpose,
receive training in acceptable debt collection practices and
loan recovery procedures, consistent with existing relevant
regulations.

Page L2 of 26
 (d) BSI staff, as well as authorized third-party agents or
representatives, do not employ practices that discriminate or
take advantage of difficulties faced by vulnerable groups.

(e) Establish policies and procedures that aim to protect

Financial Consumers' deposits and other assets, against
internal or external fraud or misuse.

(3) Ensure that the performance evaluation, remuneration structure

and compensation practices for staff of BSI and authorized third-
party agents or representatives encourage responsible business
conduct, fair treatment and avoidance/mitigation of conflicts of
i nterest.

(4) Have in place mechanisms to manage and resolve actual conflicts

of interest with respect to compensation or remuneration policies
that arise in the interaction between their staff and agents and their
Financial Consumers and potential Clients. This is demonstrated
when the staff or authorized aoent:

(a) Discloses properly to the Financial Consumer prior to the

execution of the transaction that the BSI or its staff/agent has
an interest in a direct/cross transaction with a Financial
Consumer.

(b) Discloses the limited availability of products to Financial

Consumers when the BSI only recommends products which
are issued by their related companies, subsidiaries or affiliates,
particularly when commissions or rebates are the primary
basis for recommending the particular product to Financial
Consumers.

(c) Discloses the basis on which the BSI is remunerated at the

pre-contractua I stage.

(d) Ensures that adequate systems and controls are in place to

promptly identify issues and matters that may be detrimental
to a Client's interest, for instance: cases in which advice may
have been given merely to meet sales targets or may be
driven bv financial or other incentives.

(5) Develop and adopt a risk-focused screening process for its pre-
employment or background screening based on factors like the
position to be filled, responsibilities associated with such position,
reputational and FCP risk implications. Such process may, among
others. involve:

(a) Inclusion of ethical behavior, professional conduct, and quality

of interaction with Financial Consumers as part of staff
oerformance evaluations.

Page 13 of 25
 (b) Conduct of appropriate due diligence before selecting the
authorized agents/outsourced parties, taking into account the
agents' integrity, professionalism, financial soundness,
operational capability and capacity, compatibility with the
BSI's corporate culture, and ability to implement controls to
monitor the agents' performance on a continuous basis. The
criteria for selection of authorized agents/outsourced parties
should include the presence of an established mechanism to
address Clients' complaints aqainst an authorized
a g ent/representative.

Liobility of o BSI on the c'cts or omissions of its quthorized agents ond

rePresentotives. The BSI shall be responsible for the acts or omissions of its directors,
trustees, officers, employees, or agents, in offering, marketing and transacting with
Financial Consumers for its financial oroducts or services.

The BSI shall be solidarily-liable with the accredited or authorized agents,

representatives or third-party service providers for their acts or omissions in marketing
and transacting, which may include, but not limited to debt collection, with Financial
Consumers for its financial products or services.

Privocy ond protection of client do'tq.6 BSls must ensure that they adhere to
the general data privacy principles of transparency, legitimate purpose and
proportionality under R.A. No. lOl73 or the Data Privacy Act of 2012 and its lRRs. The
principles include having well-articulated privacy notices and policies, specifying and
declaring the purpose/sfor processing and criteria being relied on asthe lawful basis
for processing Client data, ensuring that the processing is necessary and not
excessive in relation to the purpose, and implementing reasonable and appropriate
information security measures and well-defined protocols for upholding data subject
rights, among others.

Procedures in handling the personal information of the Financial Consumers

should be periodically evaluated. This should be an end-to-end process that should
cover, among others, the array of information that will be pre-identified and collected,
the purpose and manner of gathering each information, and the Information
TechnoloQy (lT)-security infrastructure of the BSls. Protocols for processing and
disclosure shall be strictly observed and implemented both within the BSI and to third
parties in accordance with the Data Privacy Act, its IRR and other applicable rules and
regulations on data privacy.

Provided, that, the criteria for lawful processing of information and protocol
for storage, destruction, disclosure, both within the BSI and to third parties, are in
accordance with the Data Privacy Act and other applicable laws, rules and regulations.

Protection of Client lnformqtion. Under this consumer orotection standard

on client information, Financial Consumers have the right to expect implementation
of the most appropriate safeguards ensuring the confidentiality, integrity, and
6 This Section should be read in conjunction wlth existing regulations on lT Risk Management System and applicable laws,
rules and regulations on data privacy.

Page 14 of 26
availability of their financial transactions, as well as expect that all relevant personal
information lawlully disclosed in the course of a transaction, are kept confidential and
are secureo.

The BSI demonstrates the ability to protect Financial Consumers' information

when, among other things, it is able to.

d. Have a declared and published privacy policy to safeguard its Financial

Consumers' personal information. This policy should govern the
collection, processing, use, distribution, storage, and eventual disposal of
Client information, and the identification of levels of permissible access
to Clients' data for BSls' employees and their third-party service
providers. BSls should ensure that privacy policies and sanctions for
violations are implemented and strictly enforced. BSls shall ensure the
accessibility of their external privacy notice on their website and other
official communication channels and digital platforms.

b. Ensure that privacy policies are regularly observed, periodically reviewed

and updated, and communicated throughout the organization. Privacy
policies shall be subject to regular review to ensure that these are
attuned to the current processing activities, taking into account the use
of new technologies and changes in the pertinent standards and/or legal
req u i rements, where appl ica ble.

Have appropriate systems or risk mitigation measures in place to protect

the confidentiality and security of the personal data of its Financial
Consumers against any threat or hazard to the security or integrity of the
information, and against unauthorized access. This includes a detailed
written security plan, based on the results of the Privacy lmpact
Assessment (PlA) conducted to identify risks in the processing of
personal data. Such plan must also include a system for responding to
possible security vulnerabilities and/or breaches. The plan must be
proportionate to their asset size, structure, nature of products and
services, complexity of operations and sensitivity of Financial Consumer
information that they handle. These security measures should be
regularly evaluated, monitored, and updated by BSls to ensure
effectiveness.

Adopt and implement information security standards and privacy by

design principles to ensure the safety and protection of the privacy,
confidentiality, integrity, availability, authenticity and non-repudiation of
Clients' information and financial transactions. End-to-end security
protocols, such as but not limited to encryptions and/or security-by-
default, between Clients and the internal systems of the BSI should be
implemented. In addition to existing applicable regulations, the Bangko
Sentral may prescribe additional minimum information security
standards for compliance by BSls. This may include network and
software design, as well as information processing, database storage,
transmission, retrieval, and disposal. Security must be maintained
throughout the life-cycle of Financial Consumers' information, from data
acquisition to disposal. BSls should have clear policies and procedures
on data breaches includinq mechanisms to address external threats and

Page 15 of 26
 internal threats, including those coming from BSI personnel or agents
that unlawfully access Client data.

subject to the provisions of existing laws, rules and regulations on data

privacy, communicate to its Financial consumers the extent of personal
information to be used and purpose for which they are to be processed,
the recipients to whom they are or may be disclosed, and the period for
which they will be stored. Financial Consumers shall be given an
opportunity to retract or cancel their consent, for purposes other than
those that are governed by existing laws, rules and regulations.

cive Financial Consumers opportunity to exercise all their rights as data

subjects by implementing mechanisms which enable the free exercise
of the same through procedures which are clear, simple, straightforward,
and convenient. Data subjects' rights include the right to be informed,
right to access their information, right to object, right to rectification or
to challenge the inaccuracy and completeness of the information, and
right to have their information amended or corrected as appropriate,
right to request for deletion or blocking, right to file a complaint, and
right to data portability. clients have the right to review their own data
to ensure that inaccuracies or deficiencies are corrected or amended,
refuse the sharing of their information to a third party, and request the
removal of their data from the BSI's system if they wish to be excluded
from receiving advertisements and other notifications, or they no longer
wish to use the BSI's services, subject to certain limitations. This is
without prejudice to compliance with existing laws, rules and
regulations on data retention. BSls must provide Financial consumers
with information on how they may request to be deleted from the BSI's
database, or to be excluded from receiving advertisements and other
notifications.

:,. Notify Financial Consumers, as soon as practicable, when privacy

breaches occur, that may leave their data vulnerable; and provide means
for Financial Consumers to prevent and respond to privacy breaches.
BSls must ensure that when data is shared across authorized parties, the
data is transferred securely and used in a manner consistent with their
privacy policy and relevant rules and regulations. BSls must provide clear
policies and procedures on addressing data breaches, from discovery of
breaches or detection of security incidents, its evaluation and
investigation, documentation, notification to affected Financial
Consumers, compensation to Financial Consumers, and compliance
with the reportorial requirements of regulatory bodies, including the
National Privacy Commission.

Effective f,lecourse. Under this Standard, Financial Consumers should be

provided with accessible, independent, fair, accountable, timely, and efficient means
for resolving concerns, inquiries and requests about their financial transactions. BSls
'should have in place mechanismsforcomplaint handling and redressand mayemploy
various modalities or technological innovations for complaints handling.

Page 16 of26
. Finqncial Consumer Protection Assistonce Mechonism (FCPAM). Each BSI
must establish a single FCPAM, commensurate to the size, structure, nature of products
and services, and complexity of operations, to provide free assistance to Financial
Consumers on their concerns about the BSI's financial products, services and/or
transactions. This shall include handling of complaints, inquiries and requests.

The BSI's FCPAM is a first-level recourse mechanism for Financial Consumers

who are dissatisfied with the financial product or service of a BSI or its third-party agent
or repreqentative. Financial Consumers are first required to report their complaints,
. inquiries or requests, through the FCPAM of the concerned BSl. As the first-level
recourse, BSls shall adopt simplified requirements and procedures for the availment of
their FCPAM by Financial Consumers. The complaints-handling process of each BSl,
including the turn-around time (TAT), must be proportionate to their asset size, structure,
nature of products and services and complexity of operations. Each BSI shall provide in
detail the steps necessary to complete the complaints-handling process, including a flow
chart indicating the end-to-end process, with the TAT for each step. BSls shall ensure
adequate manpower and resources to carry out the FCPAM. Each BSI shall also provide
Financial Consumers with information on the status and final resolution of their
' complaints, inquiries or requests.

Financial Consumers who are dissatisfied with the BSI's handling of their
complaints, inquiries or requests, may escalate their concerns with the Bangko Sentral
Consumer Assistance Mechanism (CAM). Reporting the concern with the BSI's FCPAM is
a condition precedent to the filing of a complaint to initiate the Bangko Sentral CAM.

A BSI shall:

a. Establish an effective internal complaints-handling unit or FCPAM

designed to receive, record, evaluate, resolve, monitor and report
consumer complaints, concerns, inquiries or requests to be
implemented by a designated officer, unit, group or department,
commensurate to the size, structure, nature of products and services,
and complexity of operations, ensuring that there is no conflict of
interest.

b. Establish, maintain and implement formalized, written internal policies

and processes, procedures and practices for reasonable and prompt
handling of consumer concerns. This includes clear policies on
i nvesti g ation, resol ution a nd restitution of com pla i nts.

c. Make available multiple channels or platforms for lodging complaints,

inquiries and requests; taking into consideration Financial Consumer
needs to be served; and put in place a dedicated helpdesk or hotline for
. the said purpose. Channels or platforms shall be functional, accessible
and efficient. The complaints handling service should be free of charge to
Financial Consumers, and enable a complaint to be submitted via oral,
written or digital formats.

A simple and easy-to-use guide about the procedures should be made

available to Financial Consumers, either on request or when they want to
make a complaint. The procedures should be accessible and be made
available to clients via website, social media, marketing materials in
. printed or digitalform.

Page L7 of 26
 d. Ensure that channels or platforms for submitting complaints are adapted
to Financial Consumer needs (i.e. level of literacy, accessibility) and local
specifications (i.e. language or dialect). Channels used to submit
complaints can include telephone, fax, email, complaint/suggestion
' boxes, web presence, mobile phone apps, and in person. To the extent
possible and employing a proportionate approach, BSls should make
available a toll-free number, free-response SMS texting or free data for
apps or live-chat to encourage access. A dedicated 2417 customer-care
telephone line, especially for fraud-related concerns should be put in
olace.

For BSls with simpleT operations, Clients may submit their complaint
tickets through email and/or other messaging modes provided that the
same are addressed or attended to by the BSI within 24 hours.

Maintain a management information system for the complaints from

Financial Consumers that allows for consolidation, comparison and
analysis on a regular basis, including investigating whether complaints
indicate an isolated issue or a more widespread issue for Financial
Consumers. This analysis and reports of Financial Consumer complaints
must have clear reporting and escalation structure within the BSI's risk
governance framework and covered in its CPRMS. The complaints reports
shall be submitted to Banqko Sentral in accordance with relevant
regulations.

Obtain the Financial Consumers' consent to share oersonal information

and details of their complaints, evidenced by written, electronic or
recorded means, subject to requirements under the FCP Framework, the
Data Privacy Act and its lRR, and other relevant rules and regulations on
data privacy, personal information processing, and rights of data subjects,
among others.

For Financial Consumers from vulnerable groups who might not be able
to give informed consent, BSls shall ensure reasonable accommodations
for their easy access to the FCPAM.

Protection of Consumer Assets Agoinst Frqud qnd Misuse. To mitigate the

risks of fraud and misuse faced by Financial Consumers, BSls, to the extent allowed by
existing laws, rules and regulations, must provide necessary assistance, including the
provision of relevant information relating to fraudulent or unauthorized transactions.
Further, BSls must provide clear information on the actions taken or to be taken on a
complaint, inquiry or request from a Financial Consumer involving fraudulent or
unauthorized transactions. BSls shall adequately inform Financial Consumers of their
responsibilities, as users of financial products and services, and provide timely
transaction notifications which are essential in curtailing and detecting fraudulent or
unauthorized tra nsactions.

7Simple BSls pertain to those that are not classified as comnlex Banks/Non-Bank Financial Institutions as defincd in Sec. l3l
of MORB/ Sec. ]33-Q of MORNBFI.

Page 18 of26
 Cloims ossesstnent qnd investigotion. A BSI should evaluate any claim made
by any accountholder in relation to any disputed transaction for purposes of resolving
the claim or assessing the parties' liability in accordance with the FCP Framework, and
other existing laws, rules and regulations.

BSls should resolve a claim in a fair and reasonable manner. The claim resolution
process should also be communicated to the accountholder in a timely and transparent
manner.

Fraud-related concerns should be given utmost priority and should be resolved

within a reasonable time commensurate to the complexity of the circumstances.

Reporting Chqnnels. BSls should provide its Clients with a free and active
reporting channel/s which may consist of a manned phone line, -mobile number online
portal, email, chatbot, instant messaging, or other closely-monitored communication
channels which should be available on a 2417 basis.

Any Financial Consumer who contacts the reporting channel should receive an
immediate written acknowledgement through the same channel.

Unauthorized Trqnsactions.s Concerns or disputes about fund transfers or

alleged unauthorized transactions shall be filed with the Originating Financial Institution
(OFl). The OFI is primarily responsible for providing assistance and redress to its Clients.

Upon receipt of fund transfer disputes or alleged unauthorized transactions,

the OFI shall immediately inform and provide relevant details to the Receiving Financial
. Institution (RFl). OFls and RFls should then implement the following, pending the result
of the investigation of the dispute or allegation:

d, Suspend the imposition of interest, fees or charges, if applicable;

b. Hold the disputed funds, if still intact, in compliance with BSI policies,
existing Bangko Sentral rules and regulations, or industry conventions;
Provide reasonable accommodations to the Financial Consumer, such as
a non-withdrawable provisional credit of the disputed amount or
temporary hold of the disputed amount within a given period as
determined by the BSI; and
d Perform such other necessary actions to protect the Financial Consumer's
interest and/or assets, such as but not limited to, account blocking or
freezinq of funds.

Within three (3) banking days from the conclusion of the investigation, the BSI
must inform the Client formally of the result. The information should include, among
others, a notification of debiting the provisionally-credited amount if there is sufficient
proof that no unauthorized or erroneous transaction occurred.

lf after the investigation, the disputed transaction is found to be an unauthorized

or fraudulent transaction, the BSI should immediatelv:

8These guidelines should be read in conjunction with existing regulations on lT Risk Management System, Standards and
Cuidef ines, BSP Circular 1.140, Series of 2022 and regulations on National Retail Payments Systems, and other relevant rules
and regulations.

Page 19 of26
 d. Correct or reverse the transaction found to be unauthorized or
fraudulent, including any related interest, charges and fees imposed
thereon: and/or
Make permanent the provisionally-credited amount, if any.

Subject to proportionality principle, BSls should implement fraud test

mechanisms or measures under their CPRMS to distinguish fraudulent from legitimate
transactions.

Liobility for losses orising from unquthorized transqctions. In determining

liability for losses, BSls may consider, among others, the following factors:

a. Actions of the accountholder before, during and after the unauthorized

tra nsaction;
l-\ Acts or omissions of the BSl, its employees, third-party agent, outsourced
entity or service provider acting on behalf of the the BSI; and/or
Non-compliance by the BSl, its employees, agents or service providers,
with any requirement under the FCP Framework and other existing rules
and regulations applicable to the BSI's provision of any financial product
or service: and/or

Erroneous Trqnsoctions. In case an accountholder transfers funds to a payee

account other than the intended recipient account, he/she should immediately report
the error to the OFI with the followinq details:

Name, contact number, and other credentials of the payor;

b. Account from which the payment was made;
Payee account details;
o. Transaction amount; and
E. Transaction date and time.

In case the OFI and RFI involved in an erroneous transaction are diffe,rent BSls,
the OFI must immediately inform the PFl. Both the OFI and RFI should make r':asonable
efforts to recover the sum sent in eryor in accordance with existing regulations and
industry conventions.

IOO4f.OO4-Q APPROPRIATE DESIGN AND DELIVERY OF FINANCIAL PRODUCTS AND

SERVICES

As far as practicable, BSls are expected to ensure that their financial p'oducts or
services are adequately aligned with the Financial Consumers' nee,ls, goals,
understanding and financial capabilities. BSls shall gather consumer insiglrts and/or
analytics on consumer behavior, characteristics and constraints to properly identify a
target market, design and deliver or distribute their financial products an(l services
accordingly, with attention to the needs of vulnerable segments.

BSls shall put in place internal product oversight and governance arrafrgements
designed to ensure that their financial products and services meet the needs o:'Financial
Consumers in their target markets. Clearly articulated policies, decisicn-making
Page 2O of 26
 processes, roles and responsibilities of Senior Management and all relevant i'unctional
units involved in product design and distribution must be set in place.

Following any product launch, t he BSls together with third-party distrikrutors and
other key stakeholders, may be requircd to periodically review the product design and
related disclosure materials. BSI's product development, review or e,valuation,
distribution, and after sales process shall continuously take into consideratiorr possible
risks to Financial Consumers, evolving and sophisticated technology platf,:rms and
delivery channels.

BSls are expected to exercise control over the features and innovatiors of their
digital financial products and services, including those developed in collaboration or
partnership with third party service providers. BSls must not take advantage of Clients'
inexperience and inability to access ancJ use such digital financial services.

BSls shall imolement the follolnrinq measures:

Affordobility ond suitobility ossessrnents - BSls should have written

procedures for determining whether a particular financial product or service
is suitable and affordable for their Clients. This shall include the
determination of whether the amount and terms of the offered financial
product or service allow various Clients to meet their respective obligations
with a low probability of a serious hardship, and that there is a reasonable
prospect that the financial product or service will provide value to the Client.
For the purpose of extending credit, this assessment should include
measures to orevent over-indebtedness.e

When making a recommendation to a Financial Consumer:

0) BSls that will conduct suitability assessment should inform their

Clients, clearly and simply, about the suitability assessment, its
purpose, and the BSI's responsibility to conduct the assessment under
relevant regulations so that Clients understand why they are asked to
provide certain information. BSls should encourage Clients to provide
accurate and sufficient information about their knowledge,
experience, financial situation, financial capability, ability to bear
losses, investment objectives, and risk tolerance.

(2) BSls should offer products or services that are in line with the risk
profile and/or preferences of their Clients. The BSls should allow Clients
to choose from a range of available products and services that are
most suitable to their needs, requirements or preferences. This may
include preferences on payment dates, loyalties or average balances.
BSls should provide suflicient and accurate information to enable their
Clients to select the most suitable and affordable product or service.ro

(3) BSls should advise their Clients that in case of incomolete information
or misrepresentations made in the suitability assessments, the BSI is
e This provision should be read in conjunction with Section 612 of the MORB on sales and marketing guidelines of financial
products specifically on client suitability guidelines.
io This provision should be read in conjunction with existing regulations on debt recovery or collection practices such as Sec.
3ol/3o',1-Q and Sec.3l2 of the MORB and MORNBFI.

Page 2L of 26
 not in a position to accurately determine whether the product or
service is appropriate for them. This advice may be provided in a
standardized format. lf the requested products do not match a Client's
risk tolerance assessment results, the BSI should draw attention to the
risk mismatch and provide a disclosure of consequences, either in
digital or written format, for acceptance by the Client.

Product bundling. When bundling products and services, BSls should

also take into consideration product suitability and should not unduly limit
consumer choice.

When Financial Consumers are required by a BSI to purchase a

product, such as a checking account or an insurance policy, as a
precondition for receiving a loan, they should be free to choose the provider
of the secondary product, subject to reasonable standards set by the BSl,
which shall be disclosed and made available to their Clienrs.

Information regarding the bundled product and the right of choice

should be made known to clients during the shopping and pre-contractual
phases. The BSI should not sway or pressure its Clients toward a particular
provider on the basis of its own commercial agreement with that provider.
When a choice among different providers for the secondary product is
unavailable, the BSI shall not be prohibited from offering the bundled
products, but all key features, including the identity of the provider of the
secondary product, should be fully-disclosed to the Client.

BSls should offer product bundles with market-based pricing. BSls

must focus on accelerating their digitization strategies to better understand
customer preferences and behavior and offer personalized, relevant, flexible
and intuitive bundled product offers.

b. Cooling-off period - BSls must set in place a cooling-off policy for specific
products and services, based on the BSI's assessment of the reasonable time
that allows a Client to consider the costs and risks of a financial product or
service, free from pressure of the BSI sales team and/or its third-party agents
and service providers. Financial Consumers shall be allowed to terminate,
withdraw or return the product/service contract anytime within the cooling-
off period immediately following the execution of any agreement or
contract entered into for the availment of any such product or service
covered by mandatory cooling-off period.

Provided that such a policy includes a mandatory cooling-off period of a

minimum of two (2) banking days for products and services that are
marketed, offered or sold in retail to Financial Consumers who are: (1)
individuals, regardless of income, or (2) Micro or Small Enterprises, as
defined in applicable Department of Trade and Industry (DTl) regulations,
and which possess any of the following characteristics:

(a) Are consumer credit and retail banking products sold to or entered
into by the above Financial Consumers for the first time, such as
but not limited to credit cards; loans; pawning;trust products and
other financial instru ments;

Page 22 of 26
 (b) Are marketed, offered or sold via remote means and/or subjected to
high-pressure sales or marketing;
(c) Are governed by contracts with a term or duration of more than one
(l)year;or
(d) Have other features that may be specified by the Bangko Sentral;

Provided, further, That, in the case of bancassurance, the mandatory

cooling-off period prescribed by the lnsurance Commission on the
insurance product being sold, shall apply.

In their cooling-off policy, BSls may specify products and services that
have a cooling-off period of more than the minimum requirement of two (2)
banking days, up to a maximum of 15 banking days, following the principle
that the more complex and long-term the product or service is, the longer
the cooling-off period should be.

Products and services with any of the following features are exempt
from the cooling-off period:

0) Products and services marketed, offered or sold to a BSI's

corporate clients, and medium-sized enterprises, as defined in
applicable DTI regulations;
(2) Financial instruments with a remaining term of less than one (1)
year;
(3) Financial instruments with aggregate investment size of PSOO,OOO
and above;
(4) Securities "traded" or "to be traded";or
(5) Short-term and one-off transactions, such as but not limited to
foreign currency exchange, remittances, fund transfers, or
payments a nd si m la r tra nsactiona I prod ucts/services.
i

In cases when a Financial Consumer withdraws or returns a

product/service contract, the BSI must refund or return to the Financial
Consumer the amounts paid or invested, including documents submitted,
without undue delay and within a maximum period of fifteen (15) banking
days after receipt of notice to withdraw or return. The BSI may charge and
withhold from the refund due to the Financial Consumer, the fees or charges
that are not greater than the actual or reasonable approximation of costs
incurred by the BSl.

Further, the BSI should provide the Financial Consumers with clear
and comprehensible information at pre-contractual and contracting stages
regarding the availability of cooling-off rights, the period within which these
rights can be exercised, practical instructions on how they may be exercised,
the amounts of charges or fees which may be required if exercising them,
and the consequences of not exercising them. BSls must provide Financial
Consumers with appropriate, easily accessible means or channels to
communicate their exercise of cooling-off rights.

Prepoyment of loons ond other credit ctccommodotions - BSls shall allow

a borrower, at anytime prior to the agreed maturity date, to prepay in whole
or in part, the unpaid balances of a loan or other credit transactions;
Provided, That costs or fees charged to the borrower for such pre-payment,

Page 23 of 26
 . if any, shall be disclosed in accordance with the Standard of Transparency
and Disclosure, and responsible pricing principles, as required under this
Section, and subject to such reasonable terms and conditions as may be
agreed upon between the BSls and the borrower. Disclosure must be given
before the contract is signed, at the time of contract signing, and during the
life of the contract.

BSls may charge reasonable administrative costs for the early payment of fixed
and variable interest rate loans.

Further, for fixed rate loans, BSls may separately charge costs to recover losses
based on the difference between the annual percentage rate and the current market
rate.

For loans with variable interest rate, BSls are not permitted to charge foregone
future interest.

A BSI should be able to show how it calculated or determined the amount of

prepayment charges, consistent with the relevant restrictions under this Framework.
' The BSI would need to take into account factors such as the amount being prepaid, the
remaining term of the loan, the fixed interest rate (or rates, if multiple rates apply), and
the current relevant market rates.

roos^oos-Q ENFoRCEMENT AND ADM|N|STRAT|VE SANCTTONS

Enforcement Consistent with Sec. OO2/OO2-Q of the MORB/VOpNgft, the

" Bangko Sentral shall have the authority to impose enforcement actions on BSls for non-
compliance with the FCP Framework, and other existing rules and regulations on FCP.

ln addition to the enforcement actions under Sec. OO2/OO2-Q of the

MORB/MORNBFI, the Bangko Sentral may also exercise the powers provided under
Section 6(d) of the FCPA:

a. Restriction on the ability of the BSI to continue to collect excessive or

unreasonable interests, fees or charges, including other interests, fees
and charges that are covered under Republic Act No. 1OB7O, otherwise
known as the "Philippine Credit Card Industry Regulation Law;"

b. Disgorgement.In any proceeding in which the Bangko Sentral may impose a

penalty for non-compliance with or breach of the FCPA, its IRR and other
existing laws, rules, regulations the Bangko Sentral may, in addition to
imposing a fine, enter an order requiring accounting and disgorgement of
. profits obtained, or losses avoided, as a result of a violation of the FCPA, its
IRR and other existing laws, rules, and regulations under its jurisdiction,
including reasonable interest. The Bangko Sentral shall adopt guidelines
concerning the creation and operation of a disgorgement fund, payments
to Financial Consumers, rate of interest, period of accrual, and such other
matters as it deems appropriate to implement this provision.

Page 24 of 26
 Administrotive Sonctions. Without prejudice to the enforcement actions
prescribed under FCPA Section 6 (d) and the criminal sanctions provided under FCPA
.l5,
Section the administrative sanctions under RA No. 7653, as amended, shall be made
applicable to the BSl, its directors, trustees, officers, employees or agents for violation of
the FCPA, its IRR and any related rules, regulations, orders or instructions of the Bangko
Sentral.

Provided, further, That in case profit is gained or loss is avoided as a result of the
violation of the FCPA, a fine not more than three (3) times the profit gained or loss avoided
may also be imposed by the Bangko Sentral; Provided, finolly, That in addition to the
administrative sanctions that may be imposed, the authority of the BSI to operate in
relation to a particular financial product or service may be suspended or cancelled by the
Bangko Sentral.

. No Waiver of Rights. No provision of a contract for a financial product or service

shall be lawful or enforceable if such provision waives or otherwise deorives a Client of a
legal right to sue the BSl, receive information, have their complaints addressed and
resolved, or have their Client data protected.

Such a waiver may cover agreements/contracts that limit the following:the BSI's
liability for the acts or omissions of its directors, trustees or officers, employees or agents;
obligations of the BSI; or the right of the Financial Consumer to exercise any rights under
the FCPA, its IRR or any relevant laws, rules and regulations.

Section 2. Applicability to other non-bank financial institutions (NBFls). The

provisions under Section I of this Circular shall likewise apply to NSSLAs, pawnshops, credit
card, trust corporations and other NBFIs with trust license, insofar as these are applicable to
their operations.

In this regard, the following amendments shall apply to specific MORNBFI set of
reg ulations as follows:

l. Part Seven of S-Regulations/Part Six of P-Regulations/Part Seven of N-

Regulations shall adopt the new title of Part Ten of the Q-Regulations as provided
in Section I of this Circular, and all Sections under its corresponding Part including
the provisions therein shall all be deleted, and will be replaced with the following
provision:

The Financial Consumer Protection Framework of the Bangko Sentral as stated

under Part Ten of the Q-Regulations shall be adopted insofar as these are
a ppl ica ble to the N SS LAs's/pawnshops's/ru g f l's/cred it ca rd's operations.

2. The provisions under Section 1Ol-T of the T-Regulations, in particular the cross-
reference to Part Ten of Q-regulations shall be amended to align with the new
title of Part Ten of the Q-Regulations as stated in Section I of this Circular.

3. The title of Sec. l2l-CC of the CC-Regulations shall be amended to adopt the new
title of Part Ten of the Q-Regulations as provided in Section I of this Circular, and
the provision under the said Section is hereby amended in its entirety, and shall
now read as follows:

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 The Financial Consumer Protection Framework of the Bangko Sentral as stated
under Part Ten of the Q-Regulations shall be adopted insofar as these are
applicable to the credit card's operations.

Section 3. All references to deleted Sections of the MORNBFI as orovided in Section 2

of this Circular shall now refer to its new corresponding Part Ten of the MORNBFI. Moreover,
all references to the old Part Ten of the MORB/MORNBFI (Q-Regulations) shall now refer to the
new Part lO of the MORB/MORNBFI (Q-Regulations) as provided under Section 'l of this
Circular.

Section 4. The Bangko Sentral may revise and supplement these rules and regulations
and issue related guidelines, circulars, and other issuances as it deems necessary for the
effective implementation of the various provisions of the FCPA consistent with existing laws,
rules and regulations.

. Section 5. Reportorial Requirements. Specific guidelines on the required reports,

including the mode and manner of submission, shall be covered by a separate memorandum
issuance.

Section 6. The following transitory provision shall be incorporated as footnote to Sec.

loolnool-Q of the MoRB/MoRNBFt as follows:

BSls shall be given six (6) months from the effectivity of this Circular to: (l) perform
.a gap analysis of their current CPRMS, FCPAM and related financialconsumer protection
practices vis-d-vis the provisions of this Circular; and (2) propose an action plan duly-
approved by its Board of Directors to achieve full compliance within a reasonable period
of time but not longer than one (1) year from the effectivity of this Circular.

A BSI should be able to show its plan of action with specific timelines, as well as
the status of initiatives being undertaken, to fully comply with the provisions of this
Circular, upon request of the Bangko Sentral.

Section 7. This Circular shall take effect fifteen (15) days after its publication in the
Official Cazette or in a newspaper of general circulation.

FOR THE MONETARY BOARD:

It
Lt- l< q,--'
FELIPE M. MEDALLA
Covernor

d Nou"-ber2022
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