MANILA — President Rodrigo Duterte has approved a law that aims to protect consumers from financial fraudsters by expanding the powers of regulators.

Republic Act No. 11765, signed by the President on May 6, gave financial regulators the following powers.

• Rule-making in which regulators are authorized to formulate their own standards for financial products and services
• Market conduct surveillance and examination of service providers
• Market monitoring or the authority to require service providers and their third party providers to submit relevant documents.
• Enforcement, including restricting unreasonable fees, disqualification of employees or officers of service providers, imposition of fines, issuance of cease and desist order without a prior hearing, and suspension of operations, among others
• Consumer redress or complaints handling mechanism
• Adjudication of financial transactions that are purely civil and where the claim or relief sought by the consumer does not exceed P10 million

Though regulators could issue a cease and desist order if they deem there is fraud, a violation of RA 11765, or there could be grave or irreparable injury to consumers, financial service providers would be given "an opportunity to defend its act or practice in a summary hearing" upon their request.

The law also lists the rights of financial consumers to equitable and fair treatment, disclosure and transparency of financial products and services, protection of consumer assets against fraud and misuse, data privacy protection, and redress of complaints.

WHY IS THE LAW NECESSARY?

While the number of banked Filipino adults expanded by 53 percent during the first quarter of 2021 due to the rise of e-money accounts, consumers faced the risks of small scale fraud, investment scams, and financial hacking, Sen. Grace Poe earlier said.

Around 44 percent of Filipinos have been targeted by digital fraud while fraud attempts against businesses have risen by 31 percent, she noted, citing data from credit reporting company TransUnion in March 2021.

"The increase in financial inclusion resulted in the marked increase in incidence of financial fraud and scams… thus the need for the law that lists all rights of financial consumers," said Poe, who chairs the Senate Committee on Banks, Financial Institutions and Currencies.

Sen. Win Gatchalian meanwhile noted that though the Bangko Sentral ng Pilipinas had a manual on consumer protection, it was limited to BSP-supervised financial institutions and did not cover other service providers.

"We need to strengthen the powers of government and clear up the lines on who will protect financial consumers and what are the mechanisms for financial consumers to tap into in case of fraud," he said.

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