QuestionsQuestions (Republic Act No. 3720)
It was issued pursuant to Monetary Board Resolution No. 1728 dated 02 December 2010, which amended the MORB and MORNBFI rules to enhance consumer protection in credit card operations.
It amended provisions requiring written policies, procedures, and internal control guidelines by deleting Item ada thereof (Section 1).
They must exercise proper diligence to ascertain that applicants have good credit standing and are financially capable of fulfilling their credit commitments, in accordance with the referenced prudential diligence provisions (Section 2[b]).
The Circular provides examples such as net take home pay (for employed applicants), net monthly receipts (for those in trade/business), net worth/cash flow inferred from deposits or credit behavior or lifestyle indicators (for those not employed/in trade/business), and also allows gross monthly income subject to reasonable deductions (Section 2[c]).
All such applications must undergo strict credit risk assessment, and the information stated must be validated and verified by authorized personnel other than those handling marketing (Section 2[d]).
They must provide: (1) a table of applicable fees, penalties, and interest rates (including coverage period, manner/reason for imposition), and fees and conversion reference rates for third currency transactions; and (2) a reminder in the monthly billing statement that paying only the minimum amount due or less than the total amount due would mean the imposition of interest and/or other charges (Section 3[a]).
It must be printed in plain language and in bold black letters against a light/white background, using minimum Arial 12 font or equivalent, and on the first page if the document has more than one page (Section 3[a]).
Banks and their subsidiary/affiliate credit card companies are given 120 days from the date of effectivity of the Circular to fully implement the required disclosure requirements (Section 3 transitory provisions).
Yes. The Circular provides that the required notification in writing shall be included in the terms and conditions of the credit card agreement (Section 4).
Personnel handling the collection of accounts, whether in-house collectors or third-party collection agents, must disclose his/her full name/true identity to the cardholder (Section 4).
The Circular makes certain provisions applicable to other lending operations of all BSP-supervised institutions, other than pawnshops, including (1) the disclosure/credit limits-related requirements in Section 3 (except Item 3[a2]); (2) regulations against unfair collection practices; and (3) requirements on maintaining confidentiality of information (Section 5).
It states that aside from banking laws and BSP regulations, credit card transactions are also covered by R.A. No. 7394 (Consumer Act of the Philippines) and R.A. No. 8484 (Access Devices Regulation Act) (Section 7).
First offense: reprimand for directors/officers responsible. Second offense: disqualification of the bank concerned from BSP credit facilities except as allowed under Section 84 of R.A. No. 7653. Subsequent offenses: prohibition on extension of additional credit accommodation against personal security, and penalties/sanctions under Sections 36 and 37 of R.A. No. 7653 (Section 6).
It takes effect fifteen (15) days following its publication either in the Official Gazette or in a newspaper of general circulation (Section 8).