Directive warns against ‘broad, all encompassing’ disclaimer
By Luz Wendy T. Noble Reporter
THE central bank told its supervised financial institutions to ensure compliance with standards on consumer protection in their terms and conditions for clients.
Memorandum No. M-2021-069 signed by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier called on BSP-supervised financial institutions (BSFIs) to implement fair and equitable terms and conditions as part of their compliance with consumer protection.
“Given that BSP is pushing for financial inclusion, it should also be incumbent upon us to ensure that financial consumers are protected,” Ms. Fonacier said in a Viber message.
The new memorandum reiterates provisions of Circular No. 1048 or the Financial Consumer Protection Framework issued in September 2019.
“Noncompliance with the provisions of the aforementioned Circular shall be subject to supervisory enforcement action/s,” Ms. Fonacier said in the memorandum.
The new directive stressed that terms and conditions that have “broad and all encompassing” disclaimer of legal liability on the part of a bank for losses incurred by customers is not in line with the Circular 1048.
“[T]he BSP reiterates the need to uphold the ‘Fair Treatment’ principle whereby BSFIs are required to observe fair and equitable terms and conditions…” the memorandum said.
In addition, the BSP also called on its supervised financial institutions to adhere to a “do no harm” principle in their implementation of a Consumer Protection Risk Management System and Consumer Assistance Mechanism.
“Practices that harm consumers introduce risks not only at the level of the financial institution, but also to the overall health of the financial sector particularly through decreased public trust and confidence,” the memorandum said.
Amid the rise of cyber-related incidents, Ms. Fonacier said the central bank is set to issue regulations on fraud management systems of financial institutions to strengthen their cybersecurity capabilities.
To recall, some netizens have posted photos of what they alleged as “new and improved” terms and conditions following the incident where some clients of BDO Unibank, Inc. saw unauthorized fund transfers to UnionBank of the Philippines, Inc. accounts.
Based on the screenshot, BDO’s liability clause says the bank is not liable for losses from improper transactions “with or without” the participation of the account owner.
BDO refuted such claims of revisions in its terms and conditions.
“There was no added clause due to the recent incident. BDO made exceptions and shouldered the losses not caused by the clients to maintain good customer relationship even if the bank is not legally liable,” the bank said in a statement on Tuesday.
Ms. Fonacier said the BSP’s investigation and examination regarding the fraud incident is still ongoing.
BDO last week said it had processed about 700 reimbursement claims related to the incident. UnionBank said it had identified about six persons of interest in relation to the unauthorized fund transfers.