Question & AnswerQ&A (BSP CIRCULAR NO. 702, S. 2010)
The main purpose of BSP Circular No. 702, s. 2010 is to amend regulations to enhance consumer protection in the credit card operations of banks and their subsidiary or affiliate credit card companies.
Banks/quasi-banks and their affiliate credit card companies must exercise proper diligence by ascertaining that applicants possess good credit standing and are financially capable of fulfilling their credit commitments.
Factors include net take-home pay or net monthly receipts, net worth or cash flow inferred from deposits, credit behavior from existing credit cards, and lifestyle indicators such as club memberships, ownership and location of residence, and motor vehicle ownership. Gross monthly income can also be used with reasonable deductions.
Banks must provide a table of applicable fees, penalties, and interest rates on credit card transactions, including reasons and periods covered, in plain language and visible formats on various materials and statements. Also, a reminder in the monthly billing statement that paying less than the total due will mean interest and/or other charges.
They must be printed in plain language, bold black letters against a light or white background, with a minimum Arial 12 font or equivalent, and appear on the first page if the document has multiple pages.
Banks/quasi-banks and their credit card companies must inform cardholders in writing at least seven (7) days prior to endorsing their account to a collection agency or transferring it between agencies, including the full name and contact details of the collection agency.
First offense results in reprimand for responsible directors/officers; second offense results in disqualification from BSP credit facilities; subsequent offenses may lead to prohibition from extending additional credit accommodations against personal security and other penalties under Sections 36 and 37 of R.A. No. 7653.
Credit card transactions are also covered by the Consumer Act of the Philippines (R.A. No. 7394) and the Access Devices Regulation Act (R.A. No. 8484).
Banks and credit card companies are given 120 days from the circular's effectivity date to fully implement the required disclosure requirements.