Duties And Responsibilities Of Financial Service Providers And The Rights Of Financial Consumers

• Published date: 29 January 2024
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Privacy, Financial Services, Corporate and Company Law, Privacy Protection, Securities
• Law Firm: Napiere Abueg Ragsac & Partners
• Author: Mr Renuel Napiere

The government passed Republic Act (RA) No. 11765, otherwise known as Financial Products and Services Consumer Protection Act, to ensure that appropriate mechanisms are in place to protect the interest of consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handing of financial consumer disputes, which are aligned with global best practices.

RA 11765 mandates the State to implement measures to protect the following rights of financial consumers:

1. Right to equitable and fair treatment;

2. Right to disclosure and transparency of financial products and services;

3. Right to protection of consumer assets against fraud and misuse;

4. Right to data privacy and protection; and right to timely handling and redress of complaints.

The law applies to financial products or services offered or marketed by any financial service provider.

As defined in the law, financial consumer refers to a person or entity, or their duly appointed representative, who is a purchaser, lessee, recipient, or prospective purchaser, lessee or recipient of financial products or services. It shall also refer to any person, natural or juridical, who had or has current or prospective financial transaction with a financial service provider pertaining to financial products or services.

Financial product or service refers to financial products or services which are developed or marketed by a financial service provider which may include, but are not limited to, savings, deposits, credit, insurance, pre-need and health maintenance organization (HMO) products, securities, investments, payments, remittances and other similar products and services. This also includes digital financial products or services which pertain to the broad range of financial service accessed and delivered through digital channels.

Financial service provider pertains to a person, natural or juridical, which provides financial products or services that are under the jurisdiction of the financial regulators. It also includes Investment Advisers are defined in the law.

The law grants the financial regulators, i.e., Bangko Sentral ng Pilipinas (BSP), Securities and Exchange Commission (SEC), Insurance Commission, and Cooperative Development Authority, the following powers:

1. Rulemaking, which is the authority to formulate their own standard and rules for the application of the provisions of the law to the specific financial products...