Consumer protection for financial services

Policy and rights protected

• It is the policy of the State to protect financial consumers through mechanisms grounded on transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes.
• The mechanisms reinforce consumer confidence in the financial market and foster the stability of the Philippine financial system.
• The State’s measures protect the following consumer rights:
  • The right to fair and equitable treatment.
  • The right to disclosure and transparency of financial products and services.
  • The right to protection of consumer assets against fraud and misuse.
  • The right to data privacy and protection.
  • The right to timely handling and redress of complaints.
• These rules institutionalize consumer protection as part of corporate governance and risk management of financial service providers.
• These rules aim to:
  • Ensure adequate consumer protection against unfair business practices.
  • Achieve fair and beneficial consumer outcomes.
  • Empower consumers.
  • Manage consumer risks and potential harms.

Scope, coverage, and interpretation rules

• These rules apply to all financial products or services regulated for the protection of financial consumers and the rights enumerated under Rule I, Section 1.
• These rules are construed and interpreted liberally in favor of financial consumers to protect the rights under Rule I, Section 1.
• These rules govern the obligations of Insurance Commission-Regulated Entities (ICREs) and the Commission in safeguarding consumer interests.
• These rules cover both traditional and digital financial products and services accessed and delivered through digital channels.

Key definitions established in the IRR

• Cooling off or free-look period means the number of days in the financial product or service contract from the time the financial consumer receives the contract until the last day to return or cancel the contract, with full refund if no claim has been made.
  • For Variable Unit-Linked (UVL) insurance products, the returned amount is the sum of all charges plus the market value of the units at the date of cancellation.
• Financial consumer or client includes a person or entity (or duly appointed representative) who purchases, receives, or is a prospective purchaser/recipient, and any person with a current or prospective financial transaction related to Commission-regulated financial products or services.
• Financial consumer complaint means an expression of dissatisfaction submitted by a financial consumer relative to a Commission-regulated financial product or service where a response and/or resolution is expected.
• Financial product or service means products and services regulated by the Commission, including insurance, pre-need, and Health Maintenance Organization (HMO) products/services, including digital financial products/services delivered through digital channels.
• Financial service provider means a natural or juridical person that provides Commission-regulated financial products or services.
• Informal complaint means a complaint filed before the Public Assistance and Mediation Division of the Commission under Rule VIII procedures, excluding actions filed before the Commission under adjudicatory and administrative powers.
• Insurance Commission-Regulated Entity (ICRE) means a person (natural or juridical) licensed, registered, regulated, and/or supervised by the Commission under existing laws, rules, and regulations.
• Market conduct means the manner a financial service provider designs and delivers financial products/services and manages relationships with clients and the public.
• Marketing means communicating, offering, promoting, advertising, or delivering financial products/services.
• Responsible pricing means pricing/terms/conditions set to be transparent, affordable to clients, and sustainable for financial service providers.

ICRE market guidelines and disclosure duties

• Every financial consumer has the right to be treated fairly, honestly, and professionally at all stages of the transaction, and both the Commission and ICREs must ensure mechanisms to safeguard consumer interests.
• ICREs must ensure fair and equitable treatment by:
  • Conducting suitability and affordability assessments.
  • Ensuring fairness of terms and conditions.
  • Evaluating financial products and services.
• ICREs must establish a Code of Conduct applicable to all staff and authorized agents, including:
  • Organizational values and professional standards upholding consumer protection.
  • Procedures to detect violations of consumer protection standards and to respond to and enforce sanctions for such violations.
• The Code of Conduct must be aligned with the Market Conduct Guidelines promulgated by the Commission, and existing codes must be aligned.
• ICREs must conduct suitability and affordability assessments based on guidelines issued by the Commission considering the consumer’s financial situation, capabilities, and overall risk profile.
• If a provider requires purchase of another product/service as a pre-condition, the consumer must have the option to choose the provider of that other product/service under reasonable standards set by the product/service provider, and the ICRE must inform the consumer of the right to choose prior to availing the financial product/service.
• ICREs must ensure contract terms and conditions are fair and do not create a significant imbalance to the detriment of the financial consumer.
• ICREs must continuously evaluate products/services to target needs, understanding, capacity, and risk appetite, implementing internal policies and procedures for setting prices considering responsible pricing and other Commission guidelines.
• For fair and equitable treatment evaluation, the evaluation and responsible pricing principles are adopted as part of IC Circular Letter No. 2019-71 on “Product Oversight and Governance,” and the Commission will develop product oversight and governance guidelines for other ICREs.

Disclosure, transparency, and free-look period

• Every financial consumer has the right to clear, concise, and full disclosure of all information relative to a financial product/service and to receive information enabling comparison of similar products/services in the market.
• This disclosure right is upheld before, during, and after sale, and throughout the life of the agreement.
• ICREs must disclose significant terms and conditions, including where applicable:
  • Risks, return, and possible warnings.
  • Waivers of rights and limitations of liabilities.
  • Consumer rights and responsibilities toward the ICRE.
  • Consequences of failure to meet obligations.
  • Rights and responsibilities of the ICRE.
  • Involvement of authorized agents.
  • Cancellation of the financial product/service.
  • Full price or cost, including all interest, fees, charges, and penalties, and whether they can change over time.
• For complex products (including VUL), key features, costs, and risks must be highlighted in a key facts statement or Product Highlight Sheet (PHS) provided at no additional cost, and the ICRE must ensure the customer freely signs a statement that the consumer received, read, and understood the PHS, physically, electronically, or digitally, before signing any contract.
• For products with an investment component, ICREs must disclose in cover notes that the risk is borne solely by the financial consumer, if applicable.
• ICREs must notify consumers of changes in key features and terms previously approved by the Commission at least 30 days prior to implementation, including explanation of the nature/extent of change, potential impact, and Commission approval where applicable.
• ICREs must disclose online and in promotional materials/social media, including:
  • Address and contact details of head office and branches; the intermediary’s name and contact details must form part of the insurance contract.
  • Contact details and information of the consumer assistance team and information on the Consumer Assistance Management System (CAMS) under Rule IV.
  • A statement that the ICRE is regulated by the Commission, and Commission head office and district office addresses/contact details.
  • The jurisdiction where the ICRE or intermediary is legally permitted to provide products/services.
• Advertising materials must not be false, misleading, deceptive, or omit key information materially and/or adversely affecting consumer decisions.
• ICREs must develop procedures for independent review of promotional materials intended for consumers, particularly those prepared/designed by intermediaries or third parties, to verify accuracy, and ICREs are bound by statements in marketing and sales materials regarding their offered financial products/services.
• Cooling-off/free-look periods must follow these coverage periods:
  • Coverage longer than six (6) months: Fifteen (15) days.
  • Coverage longer than thirty (30) days up to six (6) months: Five (5) days.
  • Coverage of thirty (30) days or less: No cooling-off period.
• In addition to the cooling-off period, ICREs must give adequate time before signing for the consumer to review, ask questions, and receive information to fully understand terms, costs, and risks, free from sales-team pressure.
• ICREs must provide the consumer a copy of each document signed by the consumer and, at the consumer’s option, provide proof of transaction immediately after completion in printed or electronic form.
• For digital offerings, ICREs must provide printed records upon request.
• ICREs must provide statements of account/billing statements regularly in a convenient manner to the consumer or through the same channel used for sale, commensurate to the product type and terms.

Protection against fraud, misuse, privacy, and data security

• Financial consumers have the right to expect protection of consumer assets by ICREs against fraud and misuse.
• ICREs must provide clear information on actions related to a complaint, inquiry, or request involving fraud and unauthorized transactions, exercised in accordance with Rules IV, VIII, IX, and X.
• Financial consumers have the right to confidentiality and security of financial transactions and personal data disclosed to ICREs, consistent with Republic Act No. 10173 (Data Privacy Act of 2012), its implementing rules and regulations, and National Privacy Commission issuances.
• ICREs must adopt and implement information security standards ensuring confidentiality, integrity, availability, authenticity, and non-repudiation of client information and financial transactions, consistent with Data Privacy Act of 2012 and additional guidelines that the Commission may promulgate.

Timely complaint handling and CAMS requirements

• Financial consumers must be provided accessible, affordable, independent, fair, accountable, timely, and efficient means to resolve complaints regarding financial transactions, and ICREs must have complaint handling and redress mechanisms.
• For effectiveness and timeliness, ICREs must be able to:
  • Establish an effective CAMS under Rule IV.
  • Develop internal policies and practices on consumer redress, including processing time, complaint response, and consumer access.
  • Maintain an up-to-date log and records of all complaints, including:
    • Date received.
    • Complaint details.
    • Summary of the ICRE response.
    • Actions taken to resolve.
    • Relevant correspondences or records.
    • Date resolved.
  • Ensure information on how to file a complaint is clearly visible in premises and websites.
  • Regularly analyze complaint patterns and determine whether they indicate isolated or widespread concerns, and escalate the analysis to the compliance/risk management division and senior management.
  • Provide adequate resources to handle complaints efficiently and effectively.

Consumer protection risk management system

• ICREs must establish a Consumer Protection Risk Management System (CPRMS) as a component of enterprise-wide risk management processes and risk governance framework, including Own Risk and Solvency Assessment (ORSA).
• The CPRMS must serve as the foundation for ensuring adherence to the FCPA, other consumer protection laws, and relevant Commission rules and regulations.
• The CPRMS must include, among others:
  • Governance structure.
  • Policies.
  • Processes.
  • Measurements.
  • Control procedures.
• The Board of Directors is primarily responsible for approving and overseeing CPRMS implementation and must, among others:
  • Approve CPRMS and CAMS considering business model, market, product lines, and third-party relationships that may give rise to consumer protection risks.
  • Review and approve the Code of Conduct.
  • Ensure regular reporting to the Board of relevant information on CAMS, compliance with the FCPA and consumer protection laws, rules/regulations, market conduct guidelines, and actions taken.
  • Ensure adequate resources and effective training/competency requirements for officers and personnel.
  • Approve remuneration and compensation packages structured to encourage responsible business conduct, ensure fair treatment, and mitigate conflicts of interest.
  • Periodically review CPRMS and CAMS implementation, including how findings are reported and whether audit mechanisms provide adequate oversight given the business model and operating environment.
• Senior Management must ensure ICRE practices align with approved consumer protection policies and risk management system and must, among others:
  • Document and implement CPRMS/CAMS policies and procedures across all levels and business units.
  • Ensure systems and controls identify issues affecting consumers across all phases of the consumer relationship.
  • Address weaknesses in consumer protection practices and emerging consumer protection risks through timely corrective actions.
  • Establish monitoring and management information systems to regularly measure, aggregate, and analyze consumer-related issues, including information to support:
    • Identification of emerging consumer issues and root cause analysis through CAMS performance and quality data.
    • Determining the level of consumer protection risk exposure.
    • Timely identification/monitoring of consumer protection risks causing financial loss, legal and reputational risks, and related risks.
    • Identification and assessment of emerging/increasing consumer risks through social media monitoring, market monitoring, and other means.

Consumer Assistance Management System (CAMS)

• ICREs must establish their respective CAMS for:
  • Receiving.
  • Recording.
  • Evaluating.
  • Resolving.
  • Monitoring and reporting.
• CAMS must be implemented by a designated officer/unit/group/department commensurate to the ICRE’s size, structure, nature of products/services, and complexity, ensuring no conflict of interest.
• ICREs must allow escalation to the IC through mechanisms under Rules VIII and X when financial consumers are unsatisfied with handling.
• ICREs must establish, maintain, and implement a Manual containing internal complaint handling policies/processes/practices with at least:
  • Corporate structure of the CAMS implementing unit (“Consumer Assistance Team”) with roles/responsibilities, and separation/independence from claims handling units; disagreements relating to claims handling may be referred to the Consumer Assistance Team.
  • Capacity building including regular trainings on corporate structure and financial products/services; interpersonal/counter-service; listening skills; written/verbal communication; handling feedback; dealing with difficult people; and problem-solving/conflict resolution.
  • Consumer assistance process and timeline, with ICRE-provided timelines allowed but never exceeding maximum periods:
    • Complaints/requests:
      • Acknowledgment (Simple): within two (2) working days from receipt.
      • Acknowledgment (Complex): within two (2) working days from receipt.
      • Processing/resolution (Simple): within seven (70) workings days from receipt.
      • Processing/resolution (Complex): within forty-five (45) days from receipt.
      • Communication of resolution (Simple): within nine (9) days from receipt.
      • Communication of resolution (Complex): within forty-seven (47) days from receipt.
    • Inquiries: by next business day.
  • Complaints recording/data management system.
  • Risk assessment strategies.
  • Reporting of complaints statistics to the Board and the Commission.
  • System for evaluating CAMS effectiveness.
  • Glossary.
• ICREs must publish CAMS details key features—particularly the consumer assistance process and timeline—in:
  • Conspicuous places in premises.
  • Product/service terms and conditions.
  • Marketing materials.
• ICREs must make available multiple channels to submit complaints, including walk-in/personal visits, centralized web portal, mobile application, social media, letter, email, telephone, and other channels as deemed necessary or required by the Commission.
• ICREs must operate a consumer assistance help desk or hotline dedicated to inquiries/concerns under the Consumer Assistance Team.
• When receiving and acknowledging complaints/requests, ICREs must gather and record:
  • Full name and contact details including email address, if available.
  • Nature of complaint/request and relevant details.
  • Resolution/action requested.
  • Name of claims handling personnel originally handling the concern, if applicable.
• Acknowledgment must assure the consumer that the complaint/request is being handled and the consumer will be kept informed of progress, and the consumer assistance officer must explain the process and applicable timeliness.
• ICREs must take an institutional approach to assessment/investigation and options for resolution that considers complaint peculiarities and remedies desired by the consumer, and communicate assessment/results in printed or electronic form in simple and clear language.
• ICREs must establish consumer feedback mechanisms to improve CAMS by recording/analyzing:
  • Overall consumer satisfaction.
  • Processes needing improvement.
  • Personnel needing improvement.
  • Suggestions for improvement.
• Feedback must be obtained through a feedback form or customer satisfaction survey available to walk-in clients and through other CAMS channels.
• ICREs must maintain a complaints database including, among others:
  • Complainant name.
  • Date received.
  • Subject/nature.
  • Personnel directly handling and supervising officer.
  • Actions taken.
  • Complaint resolution.
  • Date resolved.
  • Other relevant information.
• The database must be maintained by the Consumer Assistance Team in the ICRE management information system to consolidate, compare, and analyze complaints data to identify trends, determine isolated vs. widespread concerns, and identify potential problems and risks.
• Any database information must be made available to the Commission upon request.
• The Consumer Assistance Team must submit Complaint Reports to the Board quarterly, including minimum contents on categories, counts, resolutions, aging, deviations explanations, resolution descriptions/actions, and recommendations to avoid recurring complaints and suggestions for process/personnel improvement.
• ICREs must submit a Consolidated Complaints Report to the Commission quarterly following the Annex A template, submitted until the 15th day of the month following the end of the quarter.

Market monitoring and market conduct surveillance

• The Commission is authorized to require reports and documents under Section 6(c) of the FCPA and to obtain relevant data about financial products/services and markets from other government agencies.
• The Commission shall optimize technology use to gather market information, including on:
  • Misselling.
  • Claims practice (including underpayment, late payment, non-payment).
  • Unlicensed operation as regulated by the Commission.
  • Selling regulated products without prior Commission approval.
  • Deviations from approved products.
  • Customer satisfaction/feedback.
  • Improper complaints handling.
  • Establishment of branches without prior Commission approval.
  • Activities of licensed and unlicensed agents/intermediaries, including underpricing, overpricing, and misrepresentation.
• The Commission may obtain data on financial products/services/markets from the private and public sectors and within/outside insurance, pre-need, and HMO industries, including from other government agencies.
• The Commission may analyze statistics, hold industry consultations, and monitor media for news on market conduct practices and consumer sentiments.
• The Commission’s gathered information must be analyzed to develop a baseline of the market and identify providers/practices deviating significantly from the norm or posing potential risk to financial consumers.
• The Commission’s market conduct surveillance and examination under Section 6(b) of the FCPA must be separate from prudential financial examination.
• The Commission must promulgate separate guidelines on surveillance/examination consistent with the FCPA and other rules.
• Surveillance/examination includes investigation, assessment, and monitoring of ICREs to determine compliance with the FCPA, these rules, and related Commission issuances, including:
  • Obtaining ICRE policies/activities/compliance program to assess CPRMS effectiveness.
  • Assessing overall compliance with the FCPA, these rules, and other market conduct and consumer protection laws/regulations and Commission rules.
  • Assessing risks to consumers and markets of financial products/services.
• Examination includes visits to head office/branches; interviews of directors/trustees/officers/personnel; walkthroughs; validation of surveillance results; verification/review/evaluation of documents and records including policy and claims database.
• The Commission may administer oaths and compel presentation of books, documents, papers, records, and other evidence to ascertain compliance.
• The Commission must be afforded full opportunity to examine books and review systems/procedures during business hours when required.

Informal complaint process (Rule VIII)

• Informal complaints are handled under a framework for resolving conflict or dissatisfaction related to Commission-regulated financial products/services.
• The informal complaints mechanism is optional; a financial consumer may proceed directly to adjudication under Rule IX or seek redress under Rule X.
• Informal complaints may be initiated by submitting a Claimant’s Assistance Request (CAR) Form either physically to the Commission or through electronic mail.
• The CAR Form must be submitted with documents depending on the respondent’s type:
  • Non-life insurance: copy of policy; copy of denial letter (if any); copy of supporting documents (if any).
  • Life insurance: copy of policy; copy of denial letter (if any); copy of supporting documents (if any).
  • Pre-need: copy of contract; copy of Certificate of Full Payment.
  • HMO: copy of contract.
• Where the financial consumer is an individual planholder, the CAR Form is submitted directly with the prescribed documents.
• Where the financial consumer is part of a corporate account and has not been furnished a Service Agreement copy between employer and HMO, the financial consumer must coordinate so the employer accomplishes and submits the CAR to the Commission.
• The Commission may relax the documentary requirements after full operationalization of the CPRMS and CAMS.
• The Commission must evaluate the CAR Form and supporting documents and, within three (3) days from receipt, inform the financial consumer of:
  • Termination of the complaint if no basis exists.
  • Conduct of mediation/conciliation conference if the complaint involves complex issues.
  • Referral to the concerned ICRE if the ICRE has not acted with finality.
• Mediation/conciliation proceedings must be conducted for not exceeding thirty (30) days.
• There is a maximum of three (3) mediation/conciliation conferences per complaint.
• For simple issues or where the financial service provider previously denied the claim, the maximum is two (2) mediation/conciliation conferences.
• If the parties agree to a compromise settlement at any point, the complaint and proceedings terminate.
• If parties fail to agree after the maximum conferences or after lapse of the thirty (30) days (whichever comes first), the proceedings are deemed terminated.
• Upon termination, the financial consumer may opt to file a formal claim under Rule IX and/or an administrative case under Rule X.

Adjudication process and small-claims thresholds

• The Commission has authority to adjudicate actions arising from or in connection with financial transactions with ICREs, including:
  • Claims/complaints where actual damages (excluding interest, costs, and attorney’s fees) do not exceed PHP5,000,000.00 in any single claim, for any insurance, bond, reinsurance contract, or membership certificate.
  • HMO membership issues/benefits/services under an HMO agreement, including actual damages, attorney’s fees, and costs.
  • Pre-need plans.
  • Claims involving Compulsory Motor Vehicle Liability Insurance (CMVLI).
  • “Small Claims Cases” where the amount being claimed/sued does not exceed PHP1,000,000.00 exclusive of interest, costs, and attorney’s fees.
• Formal claims and complaints are initiated by filing a Verified Complaint containing:
  • Names and addresses of the parties.
  • Details of the complaint/claim when related to a policy, including date of loss, amount of loss/claim, grounds, and action by the insurer.
  • Nature of complaint when not related to a policy, including brief description and supporting documents.
  • Relief sought.
• Docket fees are determined by the principal amount claimed (exclusive of interest and attorney’s fees) using the schedule:
  • Not exceed PHP200,000.00: PHP1,000.00
  • Exceeds PHP200,000.00 up to PHP400,000.00: PHP2,000.00
  • Exceeds PHP400,000.00 up to PHP600,000.00: PHP3,000.00
  • Exceeds PHP600,000.00 up to PHP800,000.00: PHP4,000.00
  • Exceeds PHP800,000.00 up to PHP1,000,000.00: PHP5,000.00
  • Exceeds PHP1,000,000.00 up to PHP3,000,000.00: PHP10,000.00
  • Exceeds PHP3,000,000.00 up to PHP5,000,000.00: PHP15,000.00
• An additional LRF fee is collected equivalent to 1% of the docket fee in accordance with Republic Act No. 3870, as amended by Presidential Decree No. 1856 dated 26 December 1982.
• A party may be authorized to litigate as an indigent upon ex parte application and hearing if the Commission is satisfied that the party has no money or property sufficient and available for food, shelter, and basic necessities for themselves and their family.
• Within three (3) working days from receipt of a complaint, the Commission issues summons requiring the respondent to file a Verified Answer within 15 working days from receipt.
• Summons service may be made on president/managing partner/general manager/corporate secretary/treasurer/in-house counsel, or their secretaries in their absence/unavailability, or on the person who customarily receives correspondence at principal office; for conservatorship/receivership/liquidation, summons is served on the conservator/receiver/liquidator.
• If refusal persists after at least three (3) attempts on two (2) different dates, service may be made electronically by sending an electronic mail to the respondent’s electronic mail address.
• Respondents must file and serve a Verified Answer within 15 working days from summons service; affirmative and negative defenses not pleaded are deemed waived except when:
  • The Commission has no jurisdiction over the subject matter.
  • Another action is pending between the same parties for the same cause.
  • The action is barred by statute of limitations.
• If the respondent fails to file an answer within the period without justification, the Commission, motu proprio or upon motion, renders judgment warranted by the allegations in the complaint, affidavits, and other evidence on record, unless the Commission in its discretion requires additional evidence from the complainant.

Enforcement powers and administrative sanctions

• The Commission may impose enforcement actions on financial service providers for failing to comply with the FCPA, these rules, and other relevant regulations.
• Enforcement actions include:
  • Restricting ICRE ability to continue to collect excessive or unreasonable interests, fees, or charges.
  • Disqualifying and/or suspending directors, trustees, officers, or employees of ICREs responsible for violations.
  • Imposing fines, suspension,