BSP to intensify consumer education, protection program

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) continues to receive more than 140 complaints, inquiries and requests per month, prompting regulators to further intensify its consumer education and protection program.

BSP managing director Johnny Noe Ravalo said in a press conference that the central bank has received and addressed 8,561 complaints since the Financial Consumer Affairs Group (FCAG) was established five years ago.

Ravalo said complaints against unfair practices of credit card collection agencies topped the list with 2,400.

However, he pointed out that the number of complaints represent only a measly 0.01 percent of the total number of credit card accounts that currently stand at 6.5 million.

There are about 4.5 million credit card holders in the Philippines.

He explained that FCAG was created in 2006 to assist financial consumers in the resolution of their complaints with entities supervised by the BSP and to deliver financial education programs to increase the public’s understanding of basic financial concepts to help them in making informed financial decisions.

Ravalo said the BSP has enhanced banking regulations to provide greater transparency and better governance in the financial system.

Last December, he said the BSP issued new guidelines prohibiting the issuance of pre-approved credit cards and requiring a minimum form for enhanced readability of important terms and conditions particularly on interest rates, finance charges and penalties.

“Guidelines on unfair collection practices have also been upgraded by requiring notifications be sent out to cardholders before their accounts are endorsed to collection agents,” he added.

BSP Circular 702 amended the regulations to enhance consumer protection in the credit card operations of banks and their subsidiary or affiliate credit card companies.

The new guidelines prohibits banks and their affiliate credit card companies from issuing pre-approved cards on concerns that pre-approved cards sent either through the mail or delivered by courier have exposed the public to cases of fraud via unauthorized use of their cards.

It also tigthened collection practices as banks and credit card companies are now required to notify cardholders in writing within seven days before any account is endorsed to a collection agency. 

It added that that the new rules require credit card companies to ensure that collection agents disclose their true identity to cardholders in order to address mounting complaints regarding unfair collection practices by some collection agents.

The BSP has also expanded the disclosure requirements that now require banks and credit card companies to print using the minimum Arial 12 theme font size, a table of the applicable fees, penalties and interest rates on credit card transactions.

Banks and credit card issuers are also required to constantly remind their cardholders through the credit card billing statements that payment of only the minimum amount due or any amount less than the total amount due for a billing cycle would automatically mean the imposition of interest and other charges.

The amendments approved include explicit reminder of the applicability to credit card transactions of Republic Act 7394 or Consumer Act of the Philippines that provides that consumers shall pay the same price for a purchase regardless whether this is paid by cash or by a credit card.

The credit card transactions, the BSP explained, is also covered by RA 8484 or the Access Devices Regulation Act that applies to credit cards as it defines the liabilities of credit card holders when credit cards are stolen, among others.

It added that new regulations on disclosures, unfair collection practices and confidentiality of information would apply not only to credit cards but to other lending operations of all BSP-supervised institutions as well, other than pawnshops.