EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
.Of t ' ol
S E N A T E
•19 
JUL 16 All :41
In tro d u ce d  by S enator Juan M iguel F. Zubiri
AN ACT
PROVIDING FOR THE PROTECTION OF FINANCIAL CONSUMERS AND FOR
OTHER PURPOSES
EXPLANATORY NOTE
This technologically driven globalized age has drastically altered our methods 
of consumption, making it possible for anyone to purchase products with a single click. 
These days, it seems, to exist is to consume—and to consume at an instant. Mobile 
applications have increasingly become part and parcel of everyone's daily lives, as 
they provide practical intermediary services for food, transport, rental, and shopping 
needs, among others. Even underage persons with no stream of income can make 
extravagant online purchases through easily accessible applications that promise 
staggered payment schemes.
Indeed, many companies have taken advantage of this lightly regulated global 
market, and have preyed on vulnerable individuals to lure them into debt-making 
traps. Honest people save up their hard-earned money, only to get duped by dishonest 
financial investment entities in the end.
To protect the interest of these consumers, it is time now to strengthen the 
State's regulatory powers in the financial service arena. To this end, the bill seeks to 
invest rulemaking, surveillance and inspection, market monitoring, and enforcement 
powers to the nation's financial regulators, namely the Bangko Sentral ng Pilipinas, 
the Securities and Exchange Commission, and the Insurance Commission. The 
Cooperative Development Authority shall be granted such powers as well, in order to 
oversee the financial services of the cooperative sector.
With a body of financial regulators wielding strengthened and expanded 
regulatory powers as they uphold fair market practices, consumers are certain to enjoy 
financially safe and non-exploitative transactions, as is their right.
In view of the foregoing, approval of this bill is urgently sought.
IGUEL F. ZU BIR I


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
S E N A T E
f? oSl. r t -
T9 JUL 16 All -41
WTui V
In tro d u ce d  by S enator Juan M iguel F. Z ubiri
AN ACT
PROVIDING FOR THE PROTECTION OF FINANCIAL CONSUMERS AND FOR
OTHER PURPOSES
Be it enacted by the Senate and House o f Representatives o f the Philippines in Congress 
assembled:
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SECTION 1. Short Title. This Act shall be known as "Financial Consumer
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Protection Act".
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SEC. 2. Declaration o f Policy. -  It is the policy of the state to ensure that
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appropriate mechanisms are in place to protect the interest of financial consumers under
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the conditions of transparency, fair and sound market conduct, and fair, reasonable, and
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effective handling of financial consumer disputes, which are aligned with global best
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practices. These mechanisms reinforce their confidence in the financial market and foster
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the stability of the Philippine financial system.
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SEC. 3. Definition o f terms. -  As used in this Act, the following terms shall
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mean:
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a) "Consumef refers to a person who is a purchaser, lessee, recipient 
or
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prospective purchaser, lessor or recipient of consumer products and sen/ices.
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A "Financial Consumef on the other hand, refers to a natural person or micro,
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small or medium-sized enterprise that had or has current or prospective
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financial transaction with financial entities pertaining to financial products and
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services.
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b) "Financial Consumer Complaint' refers to an expression of dissatisfaction filed
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by a financial consumer against a financial person relative to a financial product
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or service in which a response or resolution is expected.
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c) "Financial Education refers to the process by which financial consumers
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improve their understanding of financial products, concepts and risks, and
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develop the skills and confidence to become more aware of financial risks and
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opportunities to make informed choices and to take other effective actions to


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improve their financial well-being. This goes beyond the financial information
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and advice given in a contractual relationship between the financial person and
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the consumers.
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d) "Financial Provider" refers to an entity that provides financial products which
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are being supervised or regulated by any of the implementing government
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agencies enumerated in this Act.
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e) 
" Financial Literacy' refers to a combination of financial awareness, knowledge,
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skills, attitude and behaviors necessary to make sound financial decisions and
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ultimately achieve financial well-being.
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f) "Financial Persorf refers to a person, natural or juridical, supervised or
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regulated by any of the implementing government agencies enumerated in this
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Act. This term shall include financial advisers as defined under Section 7 of this
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Act.
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g) " Financial Products or Serviced' refer to financial products or services which
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are developed or marketed by a financial person which may include, but are
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not limited to savings, credit, insurance, investments, payments, remittances
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and other similar products and services.
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h) 
" Financial Reguiatord' refer to the implementing government agencies of this
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Act, namely, the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange
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Commission 
(SEC), 
Insurance Commission 
(IC), 
and the Cooperative
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Development Authority (CDA).
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i) "Marketing' refers to the act of communicating, offering, promoting,
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advertising or delivering of financial products and services by financial entities.
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j) "Micro, Small or Medium-sized Enterprise (MSME)" refers to any business
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activity or enterprise engaged in industry, agri-business and/or services
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whether single proprietorship, cooperative, partnership or corporation as
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defined under R.A. No. 9501, as amended, or the Magna Carta for Micro, Small,
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or Medium-sized Enterprises. Such definition shall be subject to review and
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adjustment by the Magna Carta for Micro, Small or Medium-sized Enterprise
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(MSMED) Council.
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SEC. 4. Scope and Coverage. -  This Act applies to all financial products and
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services offered or marketed by any financial person.
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SEC. 5. Financial Regulators -  The BSP, SEC, and IC shall enforce the
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provisions of this Act on all financial entities they supen/ise or regulate by virtue of their
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respective charters, special laws and amendments thereto. The CDA shall be considered
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an implementing government agency of this Act only with respect to cooperatives offering


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financial services such as but not limited to savings and credit except insurance
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cooperatives which shall be under the jurisdiction of the Insurance Commission for
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purposes of this Act.
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SEC. 6. Powers o f the Financial Regulators. -  Financial regulators shall have
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the following powers:
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A. Rulem aking-Jhe implementing government agencies shall have the authority
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to formulate their own specific standards and rule for the application of the
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provisions of this Act to the specific financial products within their jurisdiction.
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Likewise, they may issue their respective rules of procedure concerning
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administrative actions arising from the implementation of this Act.
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B. Surveillance and Inspection -  The implementing government agencies may
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conduct off-site surveillance and on-site examination on their respective
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supervised financial entities to ascertain that the provision of this Act are
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complied with. The examination for financial consumer protection compliance
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could be conducted separately from examination of prudential regulations
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compliance.
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C. Market Monitoring -  The implementing government agencies may require
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reports or documents, as needed, from their respective supervised financial
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entities and their third party agents/service providers. The implementing
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government agencies can also access relevant data about financial products,
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services and markets from other government agencies in connection with
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market monitoring.
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D. Enforcement- The implementing government agencies shall have the authority
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to impose enforcement actions on their respective supervised financial entities
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for non-compliance with this Act. Such enforcement actions may include but
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are not limited to the following:
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a. Restriction on the ability of the supervised financial person to continue
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to collect fees or charges in case of excessive fees or charges imposed
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by the financial person;
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b. Disqualification of directors, officers, or employees of the supervised
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financial person responsible for violations of the provisions of this title
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and its Implementing Rules and Regulations (IRR);
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c. Imposition of fines or penalties for any non-compliance with or breach
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of this Act and its IRR;
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d. Issuance of a cease and desist order without the necessity of a prior
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hearing if in the implementing government agency's judgement, the act


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or practice, unless restrained, may cause grave or irreparable injury or
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prejudice to the consumer or may amount to fraud or violation of the
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provisions of this Act and its IRR; and
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e. Suspension of operation of any supervised financial person in relation to
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a particular consumer financial product or service when in the Financial
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Regulator's judgement based on findings, such person is operating in
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violation of the provisions of this Act and its IRR.
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The Financial Regulators may exercise such other powers as may be
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provided by law as well as those which may be implied from, or which are
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necessary or incidental to the carrying out of, the express power granted the
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Financial Regulators to achieve the objectives and purposes of this Act.
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SEC. 7. Investm ent Adviser -  Investment Advisers shall be subject to the
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rules and regulations to be issued by the SEC.
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Investment Adviser shall mean any person who, for compensation, engages in
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the business of advising others, either directly or through publications or writings, as
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to the value of investment products or as to the advisability of investing in, purchasing,
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or selling investment products, or who, for compensation and as part of a regular
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business, issues or promulgates analyses or reports concerning investment products;
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but does not include the following:
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A. Trust Department/Unit of Banks;
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B. Lawyer, accountant, engineer, or teacher whose performance of such
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services is solely incidental to the practice of this profession;
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C. Any investment banker or broker dealer whose performance of such
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services is solely incidental to the conduct of his business as such
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investment banker or broker dealer and who receives no special
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compensation therefor;
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D. The publisher of any bona fide newspaper, news magazine or business or
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financial publication of general and regular circulation; and
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E. Such other persons as the SEC may designate by rules and regulations or
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order.
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SEC. 8. Duties and responsibilities o f Financial Persons. -
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A. Board and Senior Management Oversight -  The Board of Directors (BOD)
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and Senior Management of every financial person shall oversee the
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implementation of the Compliance Management System (CMS) of the
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person that effectively ensure conformity with this Act and shall provide the


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means by which a financial person shall identify, measure, monitor, and 
control consumer protection risks inherent to its operations.
B. Appropriate product design and delivery -  The financial person shall 
continuously evaluate their financial products and services to ensure that 
they are appropriately targeted to the needs, understanding and capacity 
of both their markets and their clients. This shall include, among others, the 
following:
a. Affordability and suitability assessments -  The financial person 
should have written procedures for determining whether a particular 
financial consumer product or service is suitable and affordable for a 
client. This shall include determination of whether the amount and 
terms of the offered financial product or service allow the client, in 
terms of the individual ability, to meet the obligations with a low 
probability of serious hardship and reasonable prospect that the 
financial product or sen/ice will provide value to its client. For the 
purpose of extending credit, this assessment will include measures 
to prevent over-indebtedness.
b. Cooling-off period -  A financial person is expected to adopt a clear 
cooling-off policy, as may be prescribed by law or by rules and 
regulations issued by the relevant financial regulator upon its 
determination that a cooling-off period is necessary for a particular 
product subject of regulation by such financial regulator. Such 
policies should, among others, provide a client with a cooling-off 
period that will allow a client to consider the costs and risks of a 
financial product or service, free from the pressure of the sales team 
of the financial person. The length of the cooling-off period should 
be individually determine by a financial person based on reasonable 
expectation of the time require for a client to fully evaluate all the 
terms and risks of the financial product or service and contact others' 
such as but not limited to family members or business partners, who 
may be affected by its terms and conditions, unless a minimum or 
fixed period is required by the financial regulators for compliance by 
the financial provider or incorporation in its contract. Short period 
transaction or contracts may be allowed to have no cooling-off period 
which shall be provided in the regulation by the financial regulators. 
During the cooling-off period, the financial consumer may cancel or


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return the contract without penalty; however, nothing herein 
prevents the financial provider from recovering the processing fees 
incurred. The financial providers are prohibited from engaging in 
practices that unreasonably burden the financial consumer in the 
exercise of the right of cancellation during the cooling-off period. If 
the financial product is a contract of insurance, the right of return 
cannot be exercised after the financial consumer has made a claim 
under the contract of insurance.
c. Prepayment o f loans and other credit accommodations -  A borrower 
may, at any time prior to the agreed maturity date prepay, in whole 
or in part, provided that any cost or fees charged to the borrower for 
such pre-payment shall be disclosed as required under the 
succeeding provision of this Section on transparency, disclosure, and 
responsible pricing.
C. Transparency, disclosure, and responsible pricing -  Financial persons must 
ensure that they adopt disclosure principles in their communications with 
financial consumers that will include the use of clear and concise language 
understood by the target clients. This must also include updated and 
accurate product or service that should be made in a consistent manner to 
facilitate comparison between similar financial products and services across 
the industry.
Sufficient product disclosure must be provided before contracting the 
product or service to give the client enough basis and time for review. Any 
change in the terms of conditions of a product or service shall be provided 
to the client.
In their advertising. Financial Providers shall disclose that they are 
regulated and the advertising materials must identify the relevant Financial 
Regulator.
Financial Providers are legally responsible for all statements made in 
the marketing and sales materials that they produce related to their 
products.
Responsible pricing -  In addition to the requirements of R.A. No. 
3765 or The Truth in Lending Act, a financial person is required to document 
the reasons for setting the price of each financial product or service. Where 
the pricing procedures of a financial person are inadequate or unreasonably


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high, the concerned implementing government agency shall impose 
appropriate corrective actions.
D. Fair and respectful treatment o f clients -  Client selection and treatment 
shall not involve discrimination on the basis of personal characteristics or 
personal affiliations; Provided, That financial entities are not precluded from 
instituting the necessary risk mitigating measures.
Personal characteristics refer to race, ethnicity, origin, gender, 
disability, and sexual orientation. Personal affiliation denotes religious 
affiliation or political affiliation.
E. Financial consumer protection assistance mechanism -  Each financial 
person must establish a single consumer assistance handling unit to render 
free assistance to financial consumers on financial transactions concerns. 
This shall include handling of complaints, inquiries and requests. Financial 
consumers who are unsatisfied with the financial person's handling of their 
complaints, inquiries and requests, may elevate their concerns to the 
financial regulators that supervises the financial person concerned.
SEC. 9. Bundling o f Products. -  When a borrower is obliged by the financial 
provider to purchase any product, including an insurance policy, as a pre-condition 
for receiving a loan from the financial provider, the borrower should be free to 
choose the provider of the product and this information should be known to the 
borrower.
SEC. 10. Training. -  Staff of financial providers who deal directly with 
consumers must receive adequate training, suitable for the complexity of the 
products or services they sell. Financial intermediaries are qualified as appropriate 
for the complexity of the financial product or service they sell.
SEC. 11. Alternative dispute resolution. -  The redress mechanism before 
the financial regulator shall be mediatory in nature. If the financial consumer is 
unsatisfied with the result of the mediation conducted by the financial regulator, 
the financial consumer may bring the matter before an accredited external 
arbitrator of the financial regulator concerned, if any, prior to the filing of the 
appropriate action in court or tribunal.
SEC. 12. No waiver o f rig h ts -  No provision of a contract for a consumer 
financial product or service shall be lawful or enforceable if such provision waives 
or otherwise deprives a client of a legal right to sue the financial service provider, 
receive information, have their complaints addressed and resolved, have their non-


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public client data protected or cancel the use of the consumer financial product or 
service without an unreasonable penalty.
SEC. 13. Non-exemption from  compliance. -  Notwithstanding any prior 
stipulation in a contract, financial entities shall not be exempted from compliance 
with the provisions of this Act, or deprive financial consumers under this Act.
SEC. 14. Liability o f a financial person on the acts o r omissions o f its 
authorized representatives. -  The financial person shall be responsible for the 
acts or omissions of its directors, officers, employees or agents, in marketing and 
transacting with financial consumers of its financial products and services, 
provided that the said acts or omissions are not beyond the authority granted by 
the financial person. The said directors, officers, employees or agents shall be 
solely responsible for acts or omission beyond the authority granted by the 
financial person.
SEC. 15. Prescription. -  All actions or claims accruing under the provisions 
of this title and the rules and regulations pursuant thereto shall prescribe within 
five (5) years from the time the financial consumer transaction was consummated, 
or within five (5) years from the discovery of the deceit or non-disclosure of 
material facts. 
For insurance contracts, the prescriptive period for the 
commencement of action provided under the Insurance Code shall apply.
SEC. 16. Penalty fo r Violation o f this Act. -  Whenever a financial person 
willfully violates any provision of this Act or any related rules, regulations, orders 
or instructions, issued by the Financial Regulators, the person or persons 
responsible for such violation shall be punished by imprisonment of not less than 
one (1) year but not more than five (5) years, or by a fine of not less than fifty 
thousand (PHP 50,000.00) pesos but not more than five hundred thousand pesos 
(PHP 500,000.00), or both, at the discretion of the court. In addition, said violator 
shall be subject to disgorgement of the amount obtained from the financial 
consumers and investors plus interest.
A foreign national who violates any provision of this Act shall be deported 
without further proceedings after sen/ice of sentence and/or payment of fine.
SEC. 17. Adm inistrative Sanctions. -  The provisions of the administrative 
sanctions of the respective characters of the Financial Regulators shall be made 
applicable to any financial person, its directors, officers, employees, or agents 
without prejudice to the enforcement actions provided under Section 6 (D) of this 
Act and the criminal sanctions provided under Section 16 hereof, for any willful 
violation of this Act or any related rules, regulations, orders or instructions of the


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Financial Regulators: Provided, That in addition to the administrative sanctions 
that may be imposed, the authority of the financial person to operate may be 
suspended or cancelled by the Financial Regulator which primarily regulates such 
financial person.
SEC. l^.T ransitoryP rovisions-Jhe Financial Regulators shall prepare the 
necessary rules and regulations to implement the provisions of this Act within one 
(1) year from its effectivity.
SEC. 19. Separability Clause. -  If any part or provision of this Act be 
declared unconstitutional or invalid, the other provisions which are not affected 
shall continue to be in full force and effect.
SEC. 20. Repealing Clause. -  All laws, executive orders, rules, and 
regulations or parts thereof which are inconsistent with this Act are hereby 
repealed or amended accordingly. Articles 13 to 147 of Title IV of Republic Act No. 
7394 or the Consumer Act of the Philippines are hereby repealed.
SEC. 21. Effectivity Clause . -  This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in at least two (2) national newspapers 
of general circulation.
Approved,