BSP tightens rules on qualified UITF personnel

To improve consumer protection, the Bangko Sentral ng Pilipinas (BSP) has adopted stricter rules in qualifying persons marketing unit investment trust fund (UITF).

In a circular memo, signed by BSP Governor Nestor A. Espenilla Jr. last Friday, the central bank changed the required UITF marketing personnel qualification by adding a UITF Certification Program (UCP) which will be given by a BSP-recognized, reputable financial services industry association/organization.

Espenilla in the memo, said the new guideline is “in line with the thrust of the BSP to promote the development of the capital markets and to ensure investor protection.”

“The UCP is aimed at strengthening the qualification of UITF marketing personnel in order to ensure that they can provide sufficient information on UITFs to clients and promote delivery of safe and effective products and services, among others,” according to BSP Circular No. 1081. “The requirement is expected to advance the quality of UITF Marketing Personnel and their sales and marketing practices.”

The BSP wants to ensure the “competence and integrity” of UITF marketing personnel and the certification program should at least or “at a minimum” have a qualifying examination, a requirement for continuing education, and a requirement for registration of the Certified UITF Marketing Personnel.

The new rule will have a four-year transitory period since the circular said the certification requirement will be fully implemented by 2022.

The BSP said that during the transitory period, UITF Marketing Personnel authorized to sell UITFs under the existing requirements, and “who will undergo and fail to pass the UCP, will forfeit their existing qualification and will not be allowed to sell UITF until such time that they obtain the required certification.”

The banking system’s trust accountabilities include UITFs, employee benefit, pre-need and personal trust, as well as agency trust and other fiduciary services.

As of end-June, banks’ managed UITF accounted for 48.6 percent of all trust accounts. The UITFs decreased by 13.8 percent year-on-year to 1714 billion due to a drop in money market funds.

UITF types include feeder funds, multi-class UITFs and UITFs with unit-playing feature which – as the BSP explained – allows for a nonguaranteed stream of income to its participants. “Among these various types of UITFs available in the market, the Money Market Funds remained as investors’ top choice indicating the investors’ preference for holding short-term securities,” said the BSP in its latest financial system report. The Money Market Funds accounted for 68.8 percent of the total UITFs.