Declaration of Policy
- State policy aims to protect consumers of financial products and services.
- Ensures transparency, fair market conduct, and effective handling of consumer disputes.
- Protects consumers' rights including:
- Equitable and fair treatment.
- Disclosure and transparency.
- Protection against fraud and misuse of assets.
- Data privacy and protection.
- Timely handling and redress of complaints.
Definition of Terms
- Financial consumer: Person/entity purchasing or transacting in financial products/services.
- Financial consumer complaint: Dissatisfaction expressed expecting resolution.
- Financial product/service: Includes savings, credit, insurance, securities, digital financial services, etc.
- Financial regulators: BSP, SEC, IC, CDA.
- Financial service provider: Entity offering financial products/services under regulators' jurisdiction.
- Investment fraud: Deceptive solicitations like Ponzi schemes, unauthorized offerings.
- Market conduct: How providers design, deliver and manage financial products/services.
- Marketing: Communication and promotion of financial products/services.
- Responsible pricing: Pricing that is affordable for clients and sustainable for providers.
Scope and Coverage
- Applies to all financial products or services offered by any financial service provider.
Financial Regulators
- BSP, SEC, and IC enforce this Act per their charters.
- CDA implements with respect to cooperatives (excluding insurance cooperatives under IC and cooperative banks under BSP).
Powers of Financial Regulators
- Rulemaking: Formulate standards and rules guided by international standards.
- Market Conduct Surveillance and Examination: On-site/off-site examinations for compliance.
- Market Monitoring: Require reports from financial service providers and obtain data from government agencies.
- Enforcement: Actions include fines, suspensions, cease and desist orders, and suspension of operations.
- Consumer Redress: Provide alternative dispute resolution like mediation.
- Adjudication: Authority to adjudicate civil claims up to PHP 10 million; decisions are final and executory.
- Other Powers: As provided by enabling laws or necessary to enforce the Act.
Investment Adviser
- Defined as persons who advise on investments for compensation.
- Subject to SEC rules and regulations.
- Exclusions include lawyers, accountants, insurance agents in incidental roles, bona fide publishers.
Duties and Responsibilities of Financial Service Providers
- Board and Management must ensure compliance and manage consumer protection risks.
- Product Design and Delivery:
- Assess affordability and suitability.
- Implement cooling-off periods allowing contract cancellation without penalty, except in certain cases.
- Allow loan prepayment with disclosure of any fees.
- Transparency and Disclosure:
- Clear language and disclosure of pricing and changes.
- Marketing materials must disclose regulator and consumer assistance contacts.
- Fair Treatment:
- No discrimination on various protected bases.
- Prohibit abusive debt collection.
- Privacy:
- Comply with Data Privacy Act; protect client data and allow clients to correct or remove data.
- Consumer Assistance:
- Establish mechanisms for complaints and dispute handling.
- Provide reasonable accommodations during investigations.
- Information Security:
- Implement security standards protecting client information and transactions.
Bundling of Products
- Consumers may choose providers for bundled products when required as condition for financial services.
Training
- Staff must be adequately trained according to product/service complexity.
- Staff qualifications must match complexity.
Investment Fraud
- Prohibited by law.
- Penalties include criminal and administrative sanctions.
No Waiver of Rights
- Contract provisions waiving legal rights to sue, to information, or to complaint handling are unenforceable.
Liability of Financial Service Providers
- Providers liable for acts/omissions of their representatives.
- Solidary liability with accredited third-party service providers.
Prescription
- Legal actions under this Act prescribe in 5 years from transaction or discovery of violation.
- Maximum 10 years from commission of violation.
- Insurance contracts subject to Insurance Code prescriptive periods.
Penalties
- Violators face imprisonment (1-5 years), fines (PHP 50,000 to PHP 2,000,000), or both.
- Corporate officers responsible are also liable.
Administrative Sanctions
- Financial regulators may impose fines, suspend or cancel licenses, and impose other penalties.
- Investment fraud penalties can reach PHP 10 million plus daily fines.
- Disgorgement of profits may be ordered.
Independent Civil Action
- Financial regulators may sue on behalf of consumers.
- Civil penalties may be added to disgorgement or consumer benefit funds.
Implementing Rules and Regulations
- Financial regulators to issue IRR within one year from effectivity.
Separability Clause
- Unconstitutional provisions do not affect remaining provisions.
Repealing Clause
- Repeals Articles 131 to 147 of RA 7394 and other inconsistent laws or rules.
Effectivity
- The Act takes effect 15 days after publication in Official Gazette or two newspapers of general circulation.