Financial Products and Services Consumer Protection Act (Republic Act No. 11765)

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

These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. (Section 2, Republic Act. No. 11765))

The Financial Products and Services Consumer Protection Act (Republic Act No. 11765) seeks to ensure that appropriate mechanisms are in place to protect the interest of the consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices. These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. (Section 2, Financial Products and Services Consumer Protection Act)

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

Financial product or service

“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 services accessed and delivered through digital channels. (Section 3, par. c, Financial Products and Services Consumer Protection Act)

Financial Service Providers

Financial service provider refers to any person which provides financial products or services that are under the jurisdiction of financial regulators.

The law says:

“Financial service provider refers to a person, natural or juridical, which provides financial products or services that are under the jurisdiction of financial regulators as defined in this Act. This term shall include Investment Advisers as defined under Section 7 of this Act.” (Section 3, par. e, Financial Products and Services Consumer Protection Act)

The term “investment adviser” shall mean any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of investment products or as to the advisability of investing in, purchasing, or selling investment products, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning investment products. (Section 7, par. c, Financial Products and Services Consumer Protection Act)

The following entities are not considered as financial service providers:

(a) Trust Department/Unit of Banks;

(b) Stand-alone Trust Entities;

(c) Lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession;

(d) Insurance agent whose performance of such services is solely incidental to the practice of his profession;

(e) Any investment banker or broker dealer whose performance of such services is solely incidental to the conduct of his business as such investment banker or broker dealer and who receives no special compensation therefor;

(f) The publisher of any bona fide newspaper, news magazine, or business or financial publication of general and regular circulation; and

(g) Such other persons as the SEC may designate by rules and regulations, or appropriate order. (Section 7, par. c, Financial Products and Services Consumer Protection Act)

Under the law, financial service providers (FSPs) shall continuously evaluate their financial products or services to ensure that they are appropriately targeted to the needs, understanding and capacity of both their markets and their clients.

To do this, the FSPs shall have a set of written procedures for determining whether a particular financial product or service is suitable and affordable for their clients (Section 8, par. b [1], Financial Products and Services Consumer Protection Act).

FSPs must also ensure that they adopt disclosure principles in their communications and their contracts with financial consumers, including the use of clear and concise language to ensure that all information concerning the financial product or service is understood by their target clients. FSPs are legally responsible for the all statements made in the marketing and sales materials that they product relative to their financial products and services. (Section 8, par. c, Financial Products and Services Consumer Protection Act).

Source: Alburo Law