Proposal to transform BSP into a superbody nixed

The Bangko Sentral ng Pilipinas (BSP) nixed the idea of being transformed into a superbody that would regulate all financial institutions, saying that Congress could instead formalize the Financial Sector Forum (FSF) into an overseer.

The initial consensus emerged following a series of discussions between the BSP, the Insurance Commission, the Securities and Exchange Commission, the Philippine Deposit Insurance Commission, the Capital Market Development Council and other regulatory agencies supervising various financial institutions.

The focus group discussion was convened by economist Mario Lamberte for the Economic Policy Reform and Advocacy (EPRA) Group to discuss the initiative to integrate the functions of country’s supervisory and regulatory bodies.

Lamberte said that the Philippines has followed a fragmented approach in the supervision and regulation of financial institutions but there is now a push towards integrating these agencies into one institution for the sake of simplification and efficiency.

"Right now, there are several gaps in our regulatory regime that has led to problems like the UrbanBank fiasco and recently, the controversy over the unit investment trust funds," Lamberte said. "We want to find out if it would make sense for us to integrate to close all these gaps."

The group presented its initial findings yesterday and according to BSP Deputy Governor Nestor Espenilla Jr., there was a consensus that critical policies need to be in place before talks of integration could start.

"There are certain pre-conditions that have to be met, beginning with the need to strengthen the regulatory powers of the existing institutions," Espenilla said.

"If integration will happen, it should do so in the course of the natural evolution of the regulatory regime," Espenilla said. "In the meantime, we have the FSF which could be transformed into an official and legal entity that would have the authority to harmonize existing regulations."

The BSP’s position was largely shared by most of the agencies but insurance commissioner Evangeline Escobillo said the process could happen even sooner.

"I don’t think we should wait for the thing to evolve," Escobillo said. "I think it should be made to happen a lot sooner. We are agencies that are already operating and we are capable of integrating."

Escobillo said the omnibus legal framework could be put in place for Congress to consider and the relevant agencies could be integrated to eventually work on harmonizing rules on corporate governance, prudential regulations and market conduct.

"I don’t mean we will collapse existing agencies," Escobillo said. "These agencies need to continue existing because they have the expertise for their respective areas of operation. We only have to integrate all the rules and regulations."