May 6, 2022
REPUBLIC ACT NO. 11765
AN ACT AFFORDING MORE PROTECTION TO CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES
SECTION 1.Short Title. — This Act shall be known as the "Financial Products and Services Consumer Protection Act."
SECTION 2.Declaration of Policy. — It is the policy of the State 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 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. Towards this end, the State shall implement measures to protect the following rights of financial consumers:
(a)Right to equitable and fair treatment;
(b)Right to disclosure and transparency of financial products and services;
(c)Right to protection of consumer assets against fraud and misuse;
(d)Right...
Declaration of Policy (Section 2):
- Ensure mechanisms to protect the rights of financial consumers:
- Right to equitable and fair treatment
- Right to disclosure and transparency of financial products and services
- Right to protection of consumer assets against fraud and misuse
- Right to data privacy and protection
- Right to timely handling and redress of complaints
Definition of Terms (Section 3):
- Financial consumer
- Financial consumer complaint
- Financial product or service (includes digital financial products/services)
- Financial regulators: BSP, SEC, IC, CDA
- Financial service provider
- Investment fraud
- Market conduct
- Marketing
- Responsible pricing
Scope and Coverage (Section 4):
- Applies to all financial products or services offered or marketed by any financial service provider.
Financial Regulators (Section 5):
- BSP, SEC, and IC shall enforce the provisions on financial service providers under their jurisdiction.
- CDA shall implement the Act for cooperatives offering financial products/services, except insurance cooperatives (under IC) and cooperative banks (under BSP).
Powers of Financial Regulators (Section 6):
- Rulemaking
- Market conduct surveillance and examination
- Market monitoring
- Enforcement actions (e.g., restrictions, disqualifications, fines, cease and desist orders, suspension of operations)
- Consumer redress or complaints handling mechanism
- Adjudication of civil actions up to ₱10,000,000 (final and executory)
- Other powers under their respective charters
Investment Adviser (Section 7):
- Subject to Chapters VII, VIII, X and XIII of Republic Act No. 8799 and SEC rules.
- Definition and exclusions provided.
Duties and Responsibilities of Financial Service Providers (Section 8):
- Board and senior management oversight
- Appropriate product design and delivery:
- Affordability and suitability assessments (Section 8(b)(1))
- Cooling-off period (Section 8(b)(2))
- Prepayment of loans and other credit accommodations (Section 8(b)(3))
- Transparency, disclosure, and responsible pricing
- Fair and respectful treatment of clients
- Privacy and protection of client data
- Financial consumer protection assistance mechanism
- Information security standards
Bundling of Products (Section 9):
- Financial consumer has the option to choose the provider of a bundled product.
Training (Section 10):
- Staff dealing with financial consumers must receive adequate training.
Investment Fraud (Section 11):
- Unlawful to commit investment fraud as defined in the Act.
- Penalties under Section 73 of Republic Act No. 8799 and administrative sanctions under Section 16.
No Waiver of Rights (Section 12):
- Contract provisions waiving legal rights of clients are unlawful and unenforceable.
Liability of Financial Service Provider (Section 13):
- Responsible for acts/omissions of directors, officers, employees, agents, and accredited third-party service providers.
Prescription (Section 14):
- Actions prescribe after 5 years from transaction or discovery of deceit/non-disclosure, but not more than 10 years from violation.
- For insurance contracts, prescriptive period under Insurance Code applies.
Penalties (Section 15):
- Imprisonment of 1-5 years, or fine of ₱50,000-₱2,000,000, or both.
- If committed by a corporation/juridical entity, directors/officers directly responsible are liable.
Administrative Sanctions (Section 16):
- Sanctions under charters of financial regulators apply.
- For investment fraud, SEC may impose fine of ₱50,000-₱10,000,000 per instance, plus ₱10,000 per day of continuing violation.
- Fine up to 3 times profit gained/loss avoided may be imposed.
- Authority to operate in relation to a product/service may be suspended or cancelled.
Independent Civil Action (Section 17):
- Financial regulators may institute civil action on behalf of aggrieved financial consumers.
- Civil penalties may be added to a disgorgement fund for the benefit of aggrieved consumers.
Implementing Rules and Regulations (Section 18):
- Financial regulators shall prepare IRR within 1 year from effectivity.
Repealing Clause (Section 20):
- Articles 131-147 of Title IV of Republic Act No. 7394 are repealed.
- Other inconsistent laws, orders, rules and regulations are repealed or amended.
Effectivity (Section 21):
- Effective 15 days after publication in the Official Gazette or at least 2 national newspapers.