MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) strengthened its financial consumer protection regulations amid the volatile global financial markets.
BSP Governor Amando Tetangco Jr. has signed Circular 898 series of 2016 amending the cooling-off provisions of the BSP Regulations on Financial Consumer Protection.
The revisions require BSP-supervised financial institutions to give their clients a “cooling off” period at least two banking days from the signing of the contract to cancel without penalty.
This right to cooling-off is one of the key requirements of the regulation that seeks to empower clients by giving them the opportunity to reconsider long-term investment decisions.
“As may be appropriate, provide the customer with a cooling-off period of a reasonable number of days (at least two banking days) immediately following the signing of any agreement or contract, particularly for financial products or services with a long-term savings component or those subject to high pressure sales contract,” Tetangco said in the circular.
The cooling-off provision covers investment in long-term financial instruments with a remaining term of at least one year. Examples are government securities, corporate bonds and long term negotiable certificate of deposit (LTNCD).
To avail, the client should notify the BSP-supervised financial institution in writing about his intention to terminate the agreement within the cooling-off period.
The client should shoulder only reasonable amount of processing or administrative fees plus any mark to market costs from the signing of the contract up to its cancellation.
The bank regulator said BSP-supervised financial institutions should disclose these costs, including the benchmark from which market value of the financial instrument will be determined, prior to the signing of the agreement or in the agreement.
“The BSP-supervised financial institution may however coilect or recover reasonable amount of processing fees,” Tetangco said.
Last Friday, the US markets got clobbered as the Dow Jones Industrial Average slumped 391 points, or 2.39 percent, while the S&P500 also lost 42 points or 2.18 percent. The Nasdaq also shed 127 points or 2.75 percent.
Analysts said the sell-off was fuelled by the rout in oil prices as well as concerns over the economic slowdown in China.