BSP boosts lending transparency measures
THE BANGKO SENTRAL ng Pilipinas has boosted its measures towards lending transparency, now mandating non-bank financial players to ensure consumers are informed about their services via various modes of communication, such as social media.
BSP Circular No. 1052 signed by BSP Deputy Governor Maria Almasara Cyd N. Tuaño-Amador on Oct. 2 extends the lending disclosure requirement under Republic Act. No. 3765 or the “Truth in Lending Act” (TLA) to other financial firms like pawnshops, non-bank financial institutions, as well as banks or non-banks operating as credit card issuers.
Previously, the requirement only covered banks, quasi-banks and nonstock savings and loan associations.
The circular also expanded the mode of disclosing relevant information required under the law.
“The enhanced law now allows disclosure through various channels of communication, including educational videos and social media and is meant to encourage BSP-supervised financial institutions (BSFIs) to be more creative, efficient, and effective in disseminating the salient TLA information, while adhering to consumer protection standards and social media risk management guidelines,” the BSP said in a statement earlier this month.
The circular allows communication of lending requirements and information through methods such as posters, brochures, pamphlets, leaflets, educational videos, corporate websites, infographics, and social media platforms.
“Said information must be conspicuously displayed and made available at all times, in physical or electronic format, to all persons to whom credit is extended by banks operating as credit card issuers subject to the consumer protection standards and social media risk management guidelines,” the BSP said in the circular.
BSP Deputy Governor Chuchi G. Fonacier said in an email that among the information required to be disclosed include “the total amount to be financed; details of finance charges, net proceeds of the loan, and percentage share of the finance charge to the total amount to be financed.”
“The disclosure requirement in the previous regulation applies to banks, quasi-banks, non- stock savings and loan associations. The new regulation now extends to other financial institutions such as pawnshops, as well as banks/non-banks operating as credit card issuers and other non-bank financial institutions,” Ms. Fonacier said.
The official said the circular is expected to encourage banks to use technology and social media as “more efficient and effective” channels in disseminating information about their products and services.
“From a consumer protection perspective, full disclosure and transparency of the cost of credit and other terms of the loan transactions are expected to empower financial consumers to make objective comparison of banking products and informed financial decisions,” Ms. Fonacier said.
She added that the BSP will assess the implementation of the new circular through regular on-site examinations and feedback from BSFIs.
“Likewise, the regulation provides enforcement actions in case of noncompliance with the disclosure requirements of the TLA,” Ms. Fonacier added.
Section 6 of the TLA says failure on the part of creditors to disclose information relevant to their lending transactions will subject them to a penalty of P100 or to an amount equal to twice the fee or charge they require, depending on which is greater, “except that such liability shall not exceed P2,000 on any credit transaction.”