Law Summary
Declaration of Policy
- Ensures consumer protection in financial products and services via transparency, fairness, and effective dispute handling.
- Reinforces consumer confidence and financial system stability.
- Protects financial consumer rights including:
- Fair and equitable treatment
- Disclosure and transparency
- Protection against fraud and misuse
- Data privacy
- Timely complaint handling
Scope and Coverage
- Applies to all financial products/services offered by cooperatives under their Articles except:
- Insurance cooperatives
- Cooperative banks
Definitions
- Authority: Cooperative Development Authority (CDA)
- CDA-Regulated Entities (CDAREs): Cooperatives regulated by CDA (excluding insurance cooperatives and cooperative banks).
- Cooling off: A consumer’s right to cancel a contract within a specified period without penalty.
- Cooperative: Registered voluntary association adhering to cooperative principles.
- Financial consumer: Persons or entities engaging in financial transactions with CDAREs.
- Financial product or service: Includes credit, savings, investments, and digital financial services.
- Investment fraud and market conduct defined with emphasis on consumer protection.
- Responsible pricing: Transparent, affordable, and sustainable.
Duties and Responsibilities of CDAREs
Fair and Equitable Treatment
- Right to select clients without discrimination but allowing distinctions for risk assessment.
- Contracts must be fair without significant imbalance; ambiguities favored to consumers.
- Prohibits abusive debt collection; requires good faith actions.
- Establish a Code of Conduct to uphold consumer protection and respond to violations.
- Train staff adequately to promote fairness and compliance.
Product Design and Delivery
- Conduct affordability and suitability assessments before product/service offering.
- Prevent over-indebtedness with clear procedures.
- Adopt cooling-off policies (3 to 10 business days) allowing cancellation without penalties.
- Allow pre-payment of loans with reasonable fees.
- Interest rates and charges determined by CDAREs but within Authority-regulated limits.
Consumer Protection Risk Management System (CPRMS)
- CDAREs must establish CPRMS as a foundation for compliance with FCPA and related laws.
Disclosure and Transparency
- Provide clear, full, and timely information before, during, and after transactions.
- Disclose all significant terms including costs, risks, consumer rights, cancellation policies, and conflict of interest.
- Notify consumers of changes 30 days prior with explanations and board resolutions.
- Publish business and contact information prominently.
- Ensure advertisements are truthful and not misleading.
- Provide consumers copies of signed documents and transaction proofs.
- Communicate in an understandable manner considering consumer literacy.
Protection Against Fraud and Misuse
- Protect consumer assets from fraud via policies and procedures.
- Provide clear actions taken on fraud complaints.
- Promote financial and digital literacy.
Privacy and Data Protection
- Uphold confidentiality of consumers’ personal and transactional data consistent with Data Privacy Act.
- Implement security standards for data integrity and confidentiality.
Responsibilities of Board of Directors and Senior Management
- Board to approve, oversee CPRMS and Consumer Assistance System, ensure resources and report compliance.
- Senior Management to implement approved policies, monitor risks, address weaknesses, ensure complaint channels, and enforce compliance.
Market Conduct Surveillance and Examination
- Authority authorized to conduct on-site and off-site surveillance and examination of CDAREs.
- Includes reviewing policies, risk and compliance assessments, branch visits, interviews, and document verification.
- Authority can compel documents and administer oaths.
Financial Consumer Protection Assistance Framework
Timely Handling and Redress
- CDAREs to provide accessible, affordable, independent, fair, and timely complaint mechanisms.
Financial Consumer Protection Assistance Management System (FCPAMS)
- Establish internal policies and maintain complaint logs.
- Ensure visible complaint filing information.
- Analyze complaints regularly and report to management.
- Provide adequate resources for complaint handling.
- Publish policy details visibly and provide multiple complaint channels.
- Collect comprehensive consumer data for complaints.
- Maintain a complaints database for analysis and reporting.
- Submit monthly and quarterly complaint reports to the Board and Authority.
Complaint Handling Before the Authority
- Consumers can submit complaints to CDA Extension Office through an Assistance Request Form with supporting documents.
- Authority evaluates complaints and may terminate, mediate, or refer to CDARE.
- Mediation lasts 15 calendar days with limited sessions; can be terminated if no resolution.
- Counsel not allowed during mediation.
Adjudication by the Authority
- Authority adjudicates consumer complaints unresolved at the cooperative level.
- Can issue subpoenas, punish contempt, and apply rules of procedure/blind analogy to Rules of Court.
- Applies to both members and non-members of cooperatives.
- Specifies venue and procedure (verified complaint, summons, answer, preliminary conference).
- Certain motions and pleadings are prohibited to expedite cases.
- Claims prescribe after 5 years from transaction consummation or discovery of deceit.
- Decision rendered within 30 days after submission.
- Authority can impose fines, administrative sanctions, suspend or cancel licenses.
- Decisions are final and executory.
Enforcement and Administrative Sanctions
- Authority empowered to impose enforcement actions such as fines, suspensions, cease-and-desist orders.
- Can restrict unreasonable charges and disqualify responsible officers.
- Sanctions include cancellation or suspension of authority to operate.
- CDAREs have joint liability for acts/omissions of their principals and authorized agents.
Other Provisions
- Authority to digitize processes for more efficient complaint handling.
- Contract provisions waiving consumer rights are invalid.
Final Provisions
- Claims prescribe after 5 years or 10 years absolute limit.
- CDAREs given one year to conduct gap analysis and action planning; full compliance within two years.
- Separability clause preserved remaining provisions.
- Rules take effect upon publication.