EIGHTEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE 
S. B.*No. 
60
di
Introduced by Senator Manuel “ Lito” M. Lapid
AN ACT
PROVIDING FOR THE PROTECTION OF FINANCIAL 
CONSUMERS AND FOR OTHER PURPOSES
EXPLANATORY NOTE
It is the policy of the state to implement appropriate mechanisms that shall 
protect the interest of financiai consumers under the conditions of transparency, fair 
and sound market conduct, and fair, reasonable and effective handiing of financial 
consumer disputes, which are aligned with global best practices.
This bill seeks to create an enabling environment where consumer rights are 
recognized and protected and to provide, among others, for the following;
1. Authority to financial regulators, namely, Bangko Sentral ng Pilipinas, 
Securities and Exchange Commission and Insurance Commission and to 
some extent the Cooperative Development Authority, to exercise 
rulemaking, 
surveillance 
and 
inspection, 
market 
monitoring 
and 
enforcement powers over financial persons;
2. Investment advisers to be supervised and regulated by the Securities and 
Exchange Commission;
3. Cooling-off period which wiil allow the financial consumer to cancel or 
return a contract without penalty subject to the conditions of the cooling- 
off policy of the financial person who offered the service or product;


4. Transparency, disclosure and responsible pricing to ensure that financial 
persons adopt the disclosure principles in deaiing with their clients; and
5. Penalty, both administrative and criminal, on responsible persons found to 
have violated the provisions of this proposed Act.
The proliferation of more complex financial products which can be accessed 
easily through financial technology exposes financial consumers to risk of being a 
victim of fraud and abuse, thus, highlights the need for financial consumer protection.
In view of the foregoing, approval of this bill is earnestly request
Senator


EIGHTEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE 
S. B.^lo. 
6Q
BILLS
Introduced by SENATOR MANUEL "LITO" M. U\PID
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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:
Section 1. Short Title. - This Act shall be known as the "Financial Consumer 
Protection Act".
Sec. 2. Declaration o f Policy. - It is the policy of the state to ensure that 
appropriate mechanisms are in place to protect the interest of financial consumers 
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.
Sec. 3. Definition o f Terms. - As used in this Act, the following terms shall
mean:
a) "Consumer" - a person who is a purchaser, lessee, recipient or prospective 
purchaser, lessor or recipient of consumer products and services. A "Financial 
Consumer" on the other hand, is a natural person or micro, small or medium­
sized enterprise that had or has current or prospective financial transaction 
with financial entities pertaining to financial products and services.


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b) "Financial Consumer Complaint" - an expression of dissatisfaction filed by a 
financial consumer against a financial provider relative to a financial product 
or service in which a response or resolution is expected.
c) "Financial Education" - The process by which financial consumers improve 
their understanding of financial products, concepts and risks, and develop the 
skills and confidence to become more aware of financial risks and 
opportunities to make informed choices and to take other effective actions to 
improve their financial well-being. This goes beyond the financial information 
and advice given in a contractual relationship between the financial provider 
and the consumers.
d) "Financial Provider" - an entity that provides financial products which are 
being supervised or regulated by any of the implementing government 
agencies enumerated in this act.
e) "Financial Literacy" - a combination of financial awareness, knowledge, 
skills, attitude and behaviors necessary to make sound financial decisions and 
ultimately achieve financial well-being.
f) "Financial Provider" - a person, natural or juridical, supervised or regulated 
by any of the implementing government agencies enumerated in this Act. This 
term shall include financial advisers as defined under Section 7 of this Act.
g) "Financial Products or Services" - financial products or services which are 
developed or marketed by a financial provider which may include, but are not 
limited to savings, credit, insurance, investments, payments, remittances, pre­
need, health care maintenance and other similar products and services.
h) "Financial Regulators" - The implementing government agencies of this 
Act, namely, the Bangko Sentral ng Pilipinas (BSP), Securities and Exchange


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Commission 
(SEC), 
Insurance Commission 
(IC) 
and 
the 
Cooperative 
Development Authority (CDA).
i) 
"Marketing" - The act of communicating, 
offering, 
promoting, 
advertising or delivering of financial products and services by financial 
entities.
j) "Micro, Small or Medium-sized Enterprise (MSME)" - any business activity or 
enterprise engaged- in industiy, ayti-business and/or services whether single 
proprietorship, cooperative, partnership or corporation as defined under R.A. 
No. 95or, as amended of the Magna Carta for Micro, Small or Medium-sized 
Enterprise. Such definition shall be subject to review and adjustment by the 
Magna Carta for Micro, Small or Medium-sized Enterprise (MSMED) Council.
Sec. 4. Scope and Coverage. -  This Act applies to all financial products and 
services offered or marketed by any financial provider.
Sec. 5. Financial Regulator. -  The BSP, SEC, and IC shall enforce the 
provisions of this act on all financial entities they supervise or regulate by virtue of 
their respective charters, special laws and amendments thereto. The CDA shall be 
considered an implementing government agency of this Act only with respect to 
cooperatives offering financial services such as, but not limited to, savings and credit 
except insurance cooperatives which shall be under the jurisdiction of the Insurance 
Commission for purposes of this Act.
Sec. 6. Powers o f the Financial Regulators. -  Financial regulators shall have 
the following powers:
A. 
Rule-making -  the implementing government agencies shall have the 
authority to formulate their own standards and rule for the application of 
the provisions of this Act to the specific financial products within their 
jurisdiction. Likewise, they may issue their respective rules of procedure


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concerning administrative actions arising from the implementation of this 
Act.
B. 
Surveillance and Inspection -  the implementing government agencies may
conduct off-site surveillance and on-site examination on their respective 
supervised financial entities to ascertain that the provisions of this Act are 
complied with. The examination for financial consumer protection 
compliance could be conducted separately from examination of prudential 
regulations compliance.
C. 
Market Monitoring -  the implementing government agencies may require
reports or documents, as needed, from their respective supervised 
financial entities and their third party agents/ service providers. The 
implementing government agencies can also access relevant data about 
financial products, services and markets from other government agencies 
in connection with market monitoring.
D. 
Enforcement -  the implementing government agencies shall have the
authority to impose enforcement actions on their respective supervised 
financial entities for non-compliance with this act. Such enforcement 
actions may include but are not limited to the following:
a. 
Restriction on the ability of the supervised financial provider to
continue to collect fees or charges in case of proven excessive fees 
or charges imposed by the financial provider;
b. 
Disqualification of directors, officers, or employees of the supervised
financial provider responsible for violations of the provisions of this 
title and its Implementing Rules and Regulations (IRR);


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C- 
Imposition of fines or penalties for any non-compliance with or breach
of this Act and its IRR;
d. 
Issuance of a cease and desist order without the necessity of a prior
hearing if in the implementing government agency's judgement, the 
act or practice, unless restrained may cause grave or irreparable 
injury or prejudice to the consumer or may amount to fraud or 
violation the provisions of this title and its IRR;
e. 
Suspension of operation of any supervised financial provider in relation
to a particular consumer financial product or service when in the 
Financial Regulator's judgment based on findings, such person is 
operating in violation of the provisions of this Act and its IRR.
The Financial Regulators may exercise such other powers as may be provided 
by law as well as those which may be implied from, or which are necessary or 
incidental to the carrying out of, the express powers granted the Financial 
Regulators to achieve the objectives and purposes of these laws.
Sec. 7. Investment Adviser- Investment Advisers shall be subject to the rules 
and regulations to be issued by the Securities and Exchange Commission.
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; but does not include the following:
a.
Trust 
Department/Unit 
of 
Banks, 
Insurance 
and 
Pre-need 
companies;


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b.
Lawyer, accountant, engineer, or teacher whose performance of
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such services is solely incidental to the practice of this
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profession;
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C.
Any investment banker or broker dealer, insurance broker or
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insurance agent, whose performance of such services is solely
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incidental to the conduct of his or her business as investment
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banker or broker dealer, insurance broker or agent and who
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receives no special compensation therefor;
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d.
The publisher of any buna fide newspaper, news magazine or
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business or financial 
publication of general and regular
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circulation;
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e.
Such other persons as the Security Exchange Commission may
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designate by rules and regulations or order.
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Sec. 8. Duties and responsibilities o f Financial Providers-
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A.
Board and Senior Management Oversight -  The Board of Directors (BOD) and
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Senior Management of every financial provider shall oversee the
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implementation of the Compliance Management System (CMS) of the
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person that effectively ensures conformity with this Act and shall provide
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the means by which a financial provider shall identify, measure, monitor
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and control consumer protection risks inherent its operations.
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B.
Appropriate Product Design and Delivery -  The financial provider shall
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continuously evaluate their financial products and services to ensure that
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they are appropriately targeted to the needs, understanding and capacity
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of both their markets and their clients. This shall include, among others.
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the following:
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1. Affordability and suitability assessments -  The financial provider should have
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written procedures for determining whether a particular financial consumer
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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 a serious hardship and reasonable 
prospect that the financial product or service will provide value to its client. 
For the purpose of extending credit, this assessment will include measures to 
prevent over-indebtedness.
2. Cooling-off period -  a financial provider 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 provider. The length of the cooling-off period should be individually 
determined by a financial provider based on reasonable expectation of the 
time required for a client to fully evaluate all the terms and risks of the 
financial product or service and contact others who may be affected by its 
terms and conditions, unless a minimum or fixed period is required by the 
financial regulator 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 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.


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C.
3. Prepayment of 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.
Transparency, disclosure and responsible pricing -  financial providers 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 
disclosure of information such as, pricing or any cost associated with the 
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 the 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 provider is required to document the 
reasons for setting the price of each financial product or service. Where the 
pricing procedures of a financial provider are inadequate or unreasonably


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E.
high, 
the 
concerned 
implementing government agency shall 
impose 
appropriate corrective actions.
Fair and respectful treatment of 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.
Privacy and protection of client data - each financial provider must respect the 
privacy and protect the data of their clients. Consistent with the provisions of 
the Data Privacy Act, the financial regulators shall issue regulations for the 
disclosure of client data to a third party. Clients have the right to review their 
client data to ensure that inaccurate or deficient data is corrected or 
amended.
Financial consumer protection assistance mechanism — Each financial provider 
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 provider's handling of their complaints, 
inquiries and requests, may elevate their concerns to the financial regulator 
that supervises the financial provider 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.


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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, tribunal or quasi-judicial body.
Sec. 12. No Waiver o f Rights - 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
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 providers 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 Provider on the Acts or Omissions o f its 
Authorized Representatives. -  The financial provider 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 
provider. The said directors, officers, employees or agents shall be solely responsible 
for acts or omission beyond the authority granted by the financial provider.
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S6C. 15. Prescription. 
All actions or claims accruing undor tho 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.
Sec. 16. Penaity for Vioiation o f this Act -  Whenever a financial provider 
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 by not less than one (1) year 
but not more than five (5) years, or by a fine of not less than fifty thousand 
(P50,000.00) pesos but not more than five hundred thousand pesos (P500,000.00), 
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/investors plus 
interest.
A foreign national who violates any provision of this Act shall be deported 
without further proceedings after service of sentence and/or payment of fine.
Sec. 17. Administrative Sanctions. -  The provisions on the administrative 
sanctions of the respective charters of the Financial Regulators shall be made 
applicable to any financial provider, 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 of this Act, for any willful 
violation of this Act or any related rules, regulations, orders or instructions of the 
Financial Regulators, provided, that in addition to the administrative sanctions that 
may be imposed, the authority of the financial provider to operate may be 
suspended or cancelled by the Financial Regulator which primarily regulates such 
financial provider.
Sec. 18. Repealing Clause. -  All laws, executive orders, rules and regulations 
or parts thereof which are inconsistent with this Act are hereby repealed or amended
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accordingly. Articles 131 to 147 of Title IV of Republic Act No. 7394 are hereby 
repealed.
Sec. 19. Transitory Provisions. -  The Financial Regulators shall prepare the 
necessary rules and regulations to implement the provisions of this Act within one 
(1) year from its effectivity.
Sec. 20. Effectivity Ciause. -  This Act shall take effect fifteen (15) days after 
its publication in the Official Gazelle or in at least two (2) national newspapers of 
general circulation.
Approved,
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