AN ACT AFFORDING MORE PROTECTION TO CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

Eighteenth Congress
Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty-sixth day of July, two thousand twenty one.

[ REPUBLIC ACT NO. 11765, May 06, 2022 ]

AN ACT AFFORDING MORE PROTECTION TO CONSUMERS OF FINANCIAL PRODUCTS AND SERVICES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Financial Products and Services Consumer Protection Act".

Section 2. Declaration of Policy. - It is the policy of the State to ensure that appropriate mechanisms are in place to protect the interest of the consumers of financial products and services under the conditions of transparency, fair and sound market conduct, and fair, reasonable, and effective handling of financial consumer disputes, which are aligned with global best practices. These mechanisms reinforce their confidence in the financial market and foster the stability of the Philippine financial system. Towards this end, the State shall implement measures to protect the following rights of financial consumers:

Section 3. Definition of Terms. - As used in this Act:

Section 4. Scope and Coverage. - This Act applies to all financial products or services offered or marketed by any financial service provider.

Section 5. Financial Regulators. - The BSP, SEC, and IC shall enforce the provisions of this Act on all financial service providers under their jurisdiction by virtue of their respective charters, special laws and amendments thereto. The CDA shall be considered an implementing govenrment agency of this Act only with respect to cooperative offering financial products or services, such as but not limited to, savings and credit, except insurance cooperatives which shall be under the jurisdiction of the IC, and cooperative banks and other BSP-supervised cooperative financial institutions, which shall be under the jurisdiction of the BSP.

Section 6. Powers of the Financial Regulators. - Financial regulations under this Act shall have the following powers:

Section 7. Investment Adviser. - Investment advisers shall be subject to the provisions of Chapters VII, VIII, X and XIII of Republic Act No. 8799, and the rules and regulations to be issued by the SEC.

The term "investment adviser" shall mean any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of investment products or as to the advisability of investing in, purchasing, or selling investment products, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning investment products; but does not include the following:

Section 8. Duties and Responsibilities of Financial Service Providers. -

Section 9. Bundling of Products. - When a financial consumer is obliged by the financial service provider to purchase any product, including an insurance policy, as pre-condition for availing a financial product or service, the financial consumer shall have the option to choose the provider of such product subject to reasonable standards set by the financial service provider, and this information shall be made available to the financial consumer.

Section 10. Training. - Staff of financial service providers who deal directly with financial consumers, including those who are involved in financial consumer protection assistance mechanism or cybersecurity, must receive adequate training suitable to the complexity of the financial products or services they offer. Financial service providers must be qualified as appropriate for the complexity of the financial product or service they offer.

Section 11. Investment Fraud. - It shall be unlawful for any person or persons to commit investment fraud as defined in this Act. Any person who commits investment fraud shall be subject to the penalties under Section 73 of Republic Act No. 8799 and the administrative sanctions under Section 16 of this Act.

Section 12. No Waiver of Rights. - No provision of a contract for a financial product or service shall be lawful or enforceable if such provision waives or otherwise deprives a client of a legal right to sue the financial service provider, receive information, have their complaints addressed and resolved, or have their non-public client data protected.

Section 13. Liability of a Financial Service Provider on the Acts or Omission of its Authorized Representatives. - The financial service provider shall be responsible for the acts or omissions of its directors, trustees, officers, employees, or agents in marketing and transacting with financial consumers for its financial products or services. The financial service provider shall be solidarily liable with accredited third-party service providers for their acts or omissions in marketing and transacting, which may include, but not limited to, debt collection, with financial consumers for its financial products and services.

Section 14. Prescription. - All actions or claims accruing under the provision of this Act, and the rules and regulations issued pursuant thereto, shall prescribe after five (5) years from the time the financial consumer transaction was consummated, or after five (5) years from the discovery of deceit or nondisclosure of material facts: Provided, That such actions shall, in any event. prescribe after ten (10) years from the commission of the violation: Provided, further, That for insurance contracts, the prescriptive period for the commencement of action provided under the Insurance Code shall apply.

Section 15. Penalties. - Any persons who willfully violates this Act or the rules, regulations, orders, or instructions issued by the financial regulators to implement this Act, shall be punished by imprisonment of not less than one (1) year, but not more than five (5) years, or by a fine of not less than Fifty thousand pesos (P50,000.00) but not more than Two million pesos (P2,000,000.00), or both, at the discretion of the court: Provided, That if the violation is committed by a corporation or a juridical entity, the directors, officers, employees, or other officers who are directly responsible for such violation shall be held liable thereto.

Section 16. Administrative Sanctions. - Without prejudice to the enforcement actions prescribed under Section 6(d) of this Act and the criminal sanctions provided under Section 15 of this Act, the administrative sanctions of the respective charters of the financial regulators shall be made applicable to a financial service provider, its directors, trustees, officers, employees or agents for violation of this Act or any related rules, regulations, orders or instructions of financial regulators; or to any persons found administrativelt liable for investment fraud: Provided, That for persons found responsible for investment fraud, the SEC may impose a fine of no less than Fifty thousand pesos (P50,000.00) nor more than Ten million pesos (P10,000,000.00) for each instance of investment fraud plus not more than Ten thousand pesos (P10,000.00) for each day of continuing violation in addition to the other administrative sanction under Section 54 of Republic Act No. 8799: Provided, further, That in case profit is gained or loss is avoided as a result of the violation of this Act or investment fraud, a fine not more than three (3) times the profit gained or loss avoided may also be imposed by the financial regulator: Provided, finally, That in addition to the administrative sanctions that may be imposed, the authority of the financial service provider to operate in relation t a particular financial product or service may be suspended or cancelled by the financial regulator.

Section 17. Independent Civil Action. - A financial regulator, consistent with public interest and protection of financial consumers, is authorized to institute an independent civil action ob behalf of aggrieved financial consumers for violations of this Act and its IRR.

If any of theses proceedings, the financial regulators obtain a civil penalty against any person or entity, or such person or entity agrees to settle such civil penalty, the amount of such civil penalty shall on the motion of the financial regulators, be added to and become part of a disgorgement fund or other fund established for the benefit of the aggrieved financial consumer.

Section 18. Implementing Rules and Regulations. - The financial regulators shall prepare the necessary rules and regulations to implement the provisions of this Act within one (1) year from its effectivity.

Section 19. Separability Clause. - If any provision of this Act is held unconstitutional or invalid, all other provisions not thereby affected shall remain valid.

Section 20. Repealing Clause. - Articles 131 to 147 of Title IV of Republic Act No. 7394 are hereby repealed. All other laws, executive orders, rules and regulations or parts thereof which are inconsistent with this Act are hereby repealed or amended accordingly.

Section 21. Effectivity. - The Act shall take effect fifteen (15) days after its publication in the Official Gazette or in at least two (2) newspapers of general circulation.

Approved,

This Act was passed by the Senate of the Philippines ad Senate Bill No. 2488 on February 2, 2022 and adopted by the House of Representatives as an amendment to House Bill No. 6768 on February 2, 2022.

Approved: MAY 06 2022

(SGD.) RODRIGO ROA DUTERTE
President of the Philippines