BSP toughens up on credit card malpractices

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has raised the bar for major players in the credit card business to protect the eight million cardholders in the country.

The central bank has approved the implementing rules and regulations of Republic Act 10870 otherwise known as the Philippine Credit Card Industry Regulation Law to make consumer credit readily available under conditions of safe, sound, efficient, and fair business conduct aligned with global best practices.

The regulators said the guidelines opened up the country’s credit card industry to new players beyond just banks and their affiliates and subsidiaries.

“Opening up the market to a wide range of players can lead to more transparent and competitive interest rates, innovative products and improved services,” the BSP said.

With the guidelines in place, key customer concerns on the transparency and manner of computing charges and fees, safeguards against unfair collection practices, immediate posting of payments, confidentiality of consumer data, and expeditious resolution of complaints and disputed transactions are addressed.

The central bank said the rules require all credit card issuers to fully disclose, in an understandable way, the manner of computing finance charges and other fees related to credit card use as well as provide ample notification prior to effecting any changes in the said charges.

The rules likewise clarify that the finance charges will be computed based on the unpaid amount of the outstanding balance as of statement cut-off date and should not include current and deferred charges.

“Prohibitions against unfair collection practices have also been strengthened where collection agents must observe good faith, fair and reasonable conduct, and proper decorum when dealing with all consumers, including cardholders already in default,” it said.

Payments using cash, check or debit cards, made through any accredited payment center should be posted on the same day by credit card issuers, while due dates falling on weekends or holidays should be automatically moved to the next business day.

Furthermore, the BSP said the IRR further protects cardholders’ right to data privacy and redress.

“Customer information can only be shared to third parties upon a cardholder’s informed consent, and under specific conditions defined by the law,” it said.

The regulator pointed out all credit card issuers must also have consumer assistance units to expeditiously address cardholders’ concerns, such as billing errors, unauthorized transactions and other credit card related issues, within 90 days from receipt of the concerns.

“It is important that credit card issuers ensure appropriate customer identification and sound credit underwriting to promote the soundness and integrity of the industry as well as promote responsible use of credit and prevent over-indebtedness,” the BSP said.

Cardholders, on the other hand, have the serious responsibility to manage their credit, protect and safeguard the integrity of their transactions, and immediately report lost cards or observed billing discrepancies.

The IRR contemplates a phased implementation of some provisions to account for the necessary adjustments in the systems and processes of existing credit card issuers.