Senate OKs bill regulating credit card industry

MANILA, Philippines – Responding to numerous complaints of credit card holders on hidden charges, excessive fees and harassment by collection agents, a law to regulate the credit card industry will soon be enacted.

The Senate approved on third and final reading House Bill 5417 or the proposed Philippine Credit Card Industry Regulation Law, which aims to uphold consumer rights and welfare, principally by providing them with more information regarding the use of credit cards. 

Sen. Sergio Osmeña III, who chairs the Senate committee on banks, financial institutions and currencies, cited data from the Bangko Sentral ng Pilipinas (BSP) indicating that consumer complaints against credit card companies have risen over the years.

Most of the complaints had to do with excessive charges, unauthorized fees, undisclosed charges, unfair collection and harassment. The rise in complaints came as the number of active credit cards grew by 25.5 percent, from 6.584 million in 2009 to 8.268 million in 2014. 

“There is no express provision in the law that protects the rights and interest of financial consumers which include credit card holders. There has been persistent clamor for us to take proactive action towards protecting consumers from potential credit card excesses,” Osmeña said. 

Under the bill, the BSP would supervise the operations of credit card issuers, almost all of which are banks.

Credit card companies would be required to provide the following information to its card holders: credit limit and changes to this; finance charges for unpaid amounts after payment on due date; interest rates for outstanding balances; default or late fees; method for determining how the interest and/or delinquency charges may be imposed; all other fees imposed like renewal, over-the-limit and processing fees, and the manner of conversion for foreign currency transactions. 

Since many of the card holders are not aware of the interest charged when they pay only the minimum amount due, the bill requires the credit card companies to indicate in the billing statement the consequence written as: “Important reminder: Paying less than the total amount due will increase the amount of interest you pay and the time it takes to repay your balance.” 

Every billing statement would also contain clear and concise repayment information that would apply to the outstanding balance.

The measure would also require all credit card companies to put up a customer assistance unit that will be responsible for providing prompt action for the expeditious resolution of complaints, inquiries and requests. 

When it comes to collecting overdue payments, which many credit card companies outsource to third party collection agencies, the bill clearly prohibits the utilization of harassment, abuse or oppressive practices.   – With Rainier Allan Ronda