Executives of Bank of the Philippine Islands, Metrobank, and Allied Bank told a Senate hearing that their clients cannot dictate upon them although some may give suggestions that the banks are free to adopt or ignore.
They said they follow an investment mix that puts caps on how much could be put in government securities and properties, for instance, and calibrate their investments according to the need of their clients for cash to meet maturing plans as in the enrolment season.
The bankers were invited to the Senate hearing which is supposed to help the lawmakers craft a bill that would govern the industry, and strengthen it for the protection of planholders.
Philippine Federation of Pre-need Plan Companies president Miguel Vazquez asked the Senate to pass a bill that will guide the regulator and give it ample flexibility in overseeing the industry which has so much room for growth.
He said too many details in the law might tie the hands of the regulator and suggested that these details be cast in the implementing rules instead.
One major point the hearing wanted to resolve was whether to retain the industry under the Securities and Exchange Commission or transfer it to the Insurance Commission.
Nothing firm has been established on this although SEC Chairperson Lilia R. Bautista said whatever is the decision, the trust funds must remain protected.
In an earlier hearing, Vazquez, admitted that the SEC has been very tough on the industry in the past two years but added that the SEC reforms had been paying off, making the industry stronger.
It was Bautista, Vazquez said, who scrapped a minimum of P50 million capitalization of a pre-need company by 2005 and imposed instead a minimum of P100 million to be met by April this year. This is double the minimum capital required of insurance companies.
Bautista also put a cap on the trustee banks’ investments in pre-determined areas and is currently coordinating with the Bangko Sentral ng Pilipinas to make sure these banks do follow the trust fund guidelines to protect the interest of planholders.