Bangko Sentral requires certification for investment agents selling UITFs

THE CENTRAL BANK is placing investment agents under its watch by requiring them to secure a certification before selling unit investment trust fund (UITF) products to the public.

In a statement, the Bangko Sentral ng Pilipinas (BSP) announced that all UITF marketing personnel must pass a certification program in order to continue offering investment tools to clients in the Philippines.

BSP Circular 1018 effectively tightens the regulator’s watch on these sellers, which prescribes all sellers to undergo a three-pronged program under a “reputable” financial services industry organization accepted by the regulator.

UITFs are pooled funds from depositors which are managed by a trust company or a bank’s trust department, with the latter deciding on where to invest the said funds in order to generate income.

UITF gains mirror current market prices which determine the rate of return for clients. However, investment platforms vary and are matched to a player’s appetite, which is determined through a risk tolerance assessment conducted by these agents.

More sophisticated UITFs allow asset managers to make bets in government-issued debt papers, tradable securities issued by foreign countries, exchange-listed securities and debt papers, loans traded in an organized market, loans from repurchase agreements, and in shares in collective investment schemes to grow an investor’s principal.

Under the new rules, a UITF agent must pass a qualifying test, fulfill requirements for continuing education, and register under the BSP for monitoring. Attendance to annual trainings and conferences is also a must to “maintain active status,” the central bank said.

“The UITF Certification Program is expected to further advance the quality of UITF Marketing Personnel and their sales and marketing practices,” the BSP added. “It will likewise ensure that the marketing personnel can provide sufficient information on UITF to clients, as well as promote delivery of safe and effective products and services.”

Trust companies who employ these sales personnel are mandated to ensure compliance to these new guidelines.

Existing marketing and sales agents of UITFs are given until 2021 to secure certification. The new rules take effect in 2022, according to the circular signed by BSP Governor Nestor A. Espenilla, Jr. last Friday.

Failure to complete the program will forfeit their current qualifications, and these personnel “will not be allowed to sell UITF until such time that they obtain the required certification.”

This would put UITF sellers on the same level as insurance brokers, which are certified and regulated by the Insurance Commission. •