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BSP reminds banks that terms and conditions should be fair

By Bim Santos Published Dec 23, 2021 1:35 pm

The Bangko Sentral ng Pilipinas (BSP) has issued a reminder to all banks and financial institutions of the need to have terms and conditions that are fair and not disadvantageous to their clients.

Under a Dec. 22 Memorandum signed by BSP deputy governor Chuchi Fonacier, the central bank said all BSP supervised financial institutions (BFSI) should comply with the provisions of BSP Circular No. 1048, which details the financial consumer protection framework.

“The BSP reiterates the need to uphold the ‘Fair Treatment’ principle whereby BSFIs are required to observe fair and equitable terms and conditions,” the BSP.

Any broad and all-encompassing disclaimer of legal liability on the part of the bank for any losses incurred by their customers is not in conformance with the above-cited regulation.

The BSP also cited a provision of Circular No. 1048 under the “Fair Treatment” provision that states: “Terms and conditions are not unfair in that there is significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer." 

“Thus, any broad and all-encompassing disclaimer of legal liability on the part of the bank for any losses incurred by their customers is not in conformance with the above-cited regulation,” the BSP noted.

The BSP’s memo did not specifically name any bank, but its issuance comes in the wake of consumer concerns over the terms and conditions of Bance de Oro Unibank (BDO), that some clients suspected have been revised recently after the bank figured in a hacking incident. BDO, however, has denied it has revised its terms and conditions recently following the “Mark Nagoyo” incident.

There was no added clause due to the recent incident.

"Liability clause is a regular compliance in the banking industry and has been part of the normal compliance for a long time. There was no added clause due to the recent incident," BDO said in a statement.

BSP also reminded banks and financial institutions to have in place “a Consumer Protection Risk Management System and Consumer Assistance Mechanism that ensure systematic application of the Consumer Protection Standards of Conduct provided under Circular No. 1048.”

“Said standards should reflect the core principle of ‘do no harm',” BSP said. “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.”

“Non-compliance with the provisions of the aforementioned Circular shall be subject to supervisory enforcement action/s,” BSP added.