SEC Issues Regulations To Implement Financial Consumer Protection Act

• Published date: 05 July 2023
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Consumer Protection, Financial Services, Compliance, Securities, Dodd-Frank, Consumer Protection Act
• Law Firm: SyCip Salazar Hernandez & Gatmaitan
• Author: -1 SyCip Salazar Hernandez & Gatmaitan

On 25 April 2023, the Securities and Exchange Commission ("SEC") issued Memorandum Circular No. 5, series of 2023 (link here) and adopted the SEC Rules and Regulations of the Financial Products and Services Consumer Protection Act of 2022 ("SEC FCPA IRR") to implement Republic Act No. 11765 (the Financial Products and Services Consumer Protection Act ("FCPA") - link to Official Gazette version is here).

The SEC FCPA IRR took effect on May 14, 2023. Some of the more relevant points of the SEC FCPA IRR are discussed below.

1. What is the scope and coverage of the SEC FCPA IRR?

The SEC FCPA IRR shall apply to all "financial products and services" and "financial service providers" (as defined below) which are under the jurisdiction of the SEC.

Note that the Bangko Sentral ng Pilipinas ("BSP") has issued a separate set of regulations to implement the FCPA as it applies to banks and other persons that provide financial products or services under the jurisdiction of the BSP (see discussion here). The FCPA also mandates the Insurance Commission and Cooperative Development Authority to issue regulations to implement the FCPA as it applies to insurance companies and cooperatives.

2. What are considered "financial products or services" under the SEC FCPA IRR? Which persons are considered "financial service providers" under the SEC FCPA IRR?

The term "financial products or services" refers to those products or services which are developed and/or marketed by a financial service provider which may include, but are not limited to, credit, securities, investments, and other similar products and services. This also includes digital financial products or services, which pertain to the broad range of financial services accessed and delivered through digital channels.

The foregoing definition is similar to the definition of adopted by the BSP in its Circular No. 1160 implementing the FCPA ("BSP FCPA IRR"), except that the BSP FCPA IRR included "fund transfers, trust products, loans, payments, and remittances" in its definition. Moreover, the BSP FCPA IRR limits financial products and services to those created, developed, and/o marketed by BSP-supervised institutions ("BSIs").

The SEC FCPA IRR also defines the term "financial service provider" (or "FSP") as any person, natural or juridical, which provides financial products or services that are under the jurisdiction of the SEC. These include (but are not limited to): (i) issuers and/or offerors of securities, securities...