Published 10 June 2022, The Daily Tribune

A new law was recently passed that seeks to enhance consumer protection and security against fraudulent financial service providers in the Philippines. Republic Act 11765, otherwise known as the “Financial Products and Services Consumer Protection Act” (FCPA) was signed into law to foster the stability of the Philippine financial system as it pushes toward a cash-lite economy.

FCPA heightens the regulation of financial products or services, which include savings, deposits, credit, insurance, pre-need and health maintenance organization (HMO) products, securities, investments, payments, remittances and other similar products and services. It, likewise, includes digital financial products or services which pertain to the broad range of financial services accessed and delivered through digital channels.

Further, FCPA provides for a grievance mechanism that is expected to be less cumbersome for consumers. Consumers may now seek redress from financial regulators, which are now granted adjudicatory authority. Consequently, consumers need not go to court to seek legal redress to seek reparation in financial transactions thereby de-clogging court dockets and providing a more efficient process for consumer redress.

As an additional measure to ensure consumer safety, the FCPA imposes additional responsibilities and duties for financial service providers. The Board of Directors and members of the senior management of the financial service provider are required to ensure conformity with the FCPA, and shall provide means by which they shall identify, measure, monitor and manage consumer protection risk in their operations. Financial service providers are also mandated to have written procedures for determining whether a particular financial product or service is suitable and affordable for their clients.

This includes the determination of whether or not the amount and terms of the financial product or service allow various clients to meet their obligation with a low probability of serious hardship, and that there is a reasonable prospect that the financial product or service will provide value to its client.

Additionally, financial service providers are expected to adopt a clear cooling-off policy. A cooling-off period is a period within which the consumer may walk away and cancel the agreement for a particular financial product or service availed.

The cooling-off period should 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 service provider. Note, however, that the cooling-off period is not required for short-term transactions or contracts. For this purpose, the discretion not to impose the cooling-off period is on the financial regulator.

Financial service providers are also mandated to adopt disclosure principles in their communications and their contracts with financial consumers, which shall use clear and concise language to ensure information concerning the financial product or service is understood by the target client.

While financial service providers have the right to select their clients, they are prohibited from discriminating against clients on the basis of race, age, financial capacity, ethnicity, origin, gender, disability, health condition, sexual orientation, religious affiliation, or political affiliation. It is also prohibited for financial service providers from employing abusive collection or debt recovery practices against financial consumers.

In case of product bundling, or when a consumer is obliged by a financial service provider to purchase any product as a pre-condition for availing a financial product or service, the consumer shall have the option to choose the provider of such product. For this purpose, the financial service provider may set reasonable standards, which shall be made available to the consumer.

It is anticipated that FCPA and the regulations that will implement it will provide the necessary measures to fortify consumer protection, especially against usurious financial transactions, fraudulent financial products and unethical collection practices.

For more of Dean Nilo Divina’s legal tidbits, please visit For comments and questions, please send an email to