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:

(a) Right to equitable and fair treatment;

(b) Right to disclosure and transparency of financial products and services;

(c) Right to protection of consumer assets against fraud and misuse;

(d) Right to data privacy and protection; and

(e) Right to timely handling and redress of complaints.

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

(a) Financial consumer refers to a person or entity, or their duly appointed representative,

who is a purchaser, lessee, recipient, or prospective purchaser, lessee or recipient of
financial products or services. It shall also refer to any person, natural or juridical, who
had or has current or prospective financial transaction with a financial service provider
pertaining to financial products or services;

(b) Financial consumer complaint refers to an expression of dissatisfaction submitted by a

financial consumer against a financial service provider relative to a financial product or
service in which a response or resolution is expected;
 (c) Financial product or service refers to financial products or services which are
developed or marketed by a financial service provider which may include, but are not
limited to, savings, deposits, credit, insurance, pre-need and health maintenance
organization (HMO) products, securities, investments, payments, remittances and other
similar products and services. This also includes digital financial products or services
which pertain to the broad range of financial services accessed and delivered through
digital channels;

(d) Financial regulators refer to the Bangko Sentral ng Pilipinas (BSP), Securities and

Exchange Commission (SEC), Insurance Commission (IC), and the Cooperative
Development Authority (CDA);

(e) Financial service provider refers to a person, natural or juridical, which provides

financial products or services that are under the jurisdiction of financial regulators as
defined in this Act. This term shall include Investment Advisers as defined under Section
7 of this Act;

(f) Investment fraud refers to any form if deceptive solicitation of investments from the

public. This includes Ponzi schemes and such other schemes involving the promise or
offer of profits or returns which are sourced from the investments or contributions made
by the investors themselves, boiling room operations, and the offering or selling of
investment schemes to the public without a license or permit from the SEC, unless such
offering or selling involves exempt securities or are considered as exempt transactions as
provided for under existing laws;

(g) Market conduct refers to the manner by which a financial service provider designs

and delivers its financial products or services and manages its relationships with its
clients and the public;

(h) Marketing refers to the act of communicating, offering, promoting, advertising, or

delivering of financial products or services by financial service providers; and

(i) Responsible pricing refers to the pricing, terms, and conditions of financial products

and/or services that are set in a way that is both affordable to clients and sustainable for
financial service providers by taking into account, among others, client needs and the
pricing schemes of the competitors

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:

(a) Rulemaking. - Financial regulators shall have the authority to formulate their own
standard and rules for the application of the provisions of this Act to specific financial
products or services within their jurisdiction guided by internationally accepted standards
and practices. Financial regulators may also determine reasonableness of interest charges
or fees which a financial service provider may demand, collect, or receive for any service
or product offered to a financial consumer. Likewise, they may issue their respective
rules of procedure concerning administrative actions arising from the implementation of
this Act.

(b) Market Conduct Surveillance and Examination. - Financial regulators may conduct

surveillance and examination, on-site or off-site, on their respective financial service
providers, consistent with their respective risk-based supervision policies, to ascertain
that the provisions of this Act are complied with. The examination for financial consumer
protection compliance may be conducted separately from examination of prudential
regulations compliance. The provisions on the conduct of examination and surveillance
provided in the respective charters of financial regulators, and pertinent special laws shall
be made applicable in the examination and surveillance activities authorized under this
Act.

The department heads and the examiners of the financial regulators shall be authorized to
administer oaths to any director, officer, or employee of the supervised financial service
providers subject to the examination of their marker conduct and compliance with this
Act, and to compel the presentation of all books, documents, papers, or records in any
form necessary in their judgment to ascertain compliance of financial service providers to
this Act.

The supervised financial service provider shall afford to its respective financial regulator
full opportunity to examine its records, and review its systems and procedures, at any
time during business hours when requested to do so by the financial regulator.

(c) Market Monitoring. - Financial regulators shall have the authority to require their
respective supervised financial service providers and their third party agents/service
providers to submit reports or documents, as needed.

For purposes of market monitoring, the financial regulators may obtain relevant data
about financial products, services and markets from other government agencies, which
shall be duty-bound to furnish the same.

(d) Enforcement. - Financial regulators shall have the authority to impose enforcement

actions on their respective supervised financial service providers for noncompliance with
this Act and other existing laws pertinent to the jurisdiction and authority of the
respective financial regulators. Such enforcement actions may include the following:

(1) Restriction on the ability of the supervised financial service provider to

continue to collect excessive or unreasonable interests, fees or charges, including
all other interests, fees and charges covered under Republic Act No. 10870,
otherwise known as the "Philippine Credit Card Industry Regulation Law";

(2) Disqualification and/or suspension of directors, trustees, officers, or

employees of the supervised financial service provider responsible for violations
of the provisions of this Act, its implementing rules and regulations (IRR), or
orders of the financial regulators;

(3) Imposition of fines, suspension, or penalties for any noncompliance with or

breach of this Act, its IRR, or the orders of the financial regulators;

(4) Issuance of a cease and desist order to the financial service provider without
the necessity of a prior hearing if in the financial regulator's judgment, the act or
practice, unless restrained, amounts to fraud or a violation of the provisions of this
Act and its IRR, or may unjustly cause grave or irreparable injury or prejudice to
financial consumers. The financial service provider shall be afforded an
opportunity to defend its act or practice in a summary hearing before the financial
regulator or its designated body, upon request made by the financial service
provider within five (5) calendar days from its receipt of the order. If no such
hearing is requested within the said period, the order shall be final. If a hearing is
requested by the financial service provider, the proceedings shall be conducted
summarily without adhering to the technical rules of evidence, and all issues shall
be determined primarily on the basis of records, after which the financial
regulator may either reconsider or finalize and execute its order;

(5) Suspension of operation of any supervised financial service provider in

relation toa particular financial product or service when in the financial regulator's
judgment, based on findings, the financial service provider is operating in
violation of the provisions of this Act, and its IRR; and

(6) In any proceedings in which the financial regulators may impose a penalty for
noncompliance with or breach of this Act and other existing laws under their
jurisdiction, the financial regulators, in addition to the imposed fine, may enter an
order requiring accounting and disgorgement of profits obtained, or losses
avoided, as a result of a violation of this Act and other existing laws, including
reasonable interest. The financial regulators are authorized to adopt rules,
regulations, and orders concerning the creation and operation of a disgorgement
fund, payment to financial consumers, rate of interest, period of accrual, and such
other matters as deemed appropriate to implement this provision.
 (e) Consumer Redress or Complaints Handling Mechanism. - Financial regulators shall
provide efficient and effective consumer redress or complaints handling mechanism such
as mediation, conciliation or other modes of alternative dispute resolution to address
conflict/dissatisfaction from financial consumers arising from financial products or
services. The financial consumer may avail of the mechanism prior to adjudication.

(f) Adjudication. - Financial regulators shall have the authority to adjudicate all actions as
provided under existing laws.

The BSP and SEC shall have the authority to adjudicate actions arising from or in
connection with financial transactions that are purely civil in nature, and the claim or
relief prayed for by the financial consumer id solely for payment or reimbursement of
sum of money not exceeding the amount of Ten million pesos (P10,000,000.00). The
decision of the financial regulators in the adjudication shall be final and executory, and
may not be restrained or set aside by the court except on petition for certiorari on the
ground of grave abuse of discretion, or lack or excess of jurisdiction of the financial
regulators. The petition for certiorari may only be filed within ten (10) days from receipt
by the aggrieved party of the decision: Provided, That in the case of BSP and SEC, the
aggrieved party may file the petition with the Court of Appeals. The adjudicatory power
shall be exercised by the Head of the concerned financial regulator or a duly authorized
officer or body: Provided, That in the case of BSP and SEC, the decision of the
authorized officer or body is not appealable to the Monetary Board or to the
Commission en banc, respectively.

The BSP and SEC may order the payment or reimbursement of money which is subject to
the action filed before them. In the exercise of their adjudicatory powers, they shall have
the power to issue subpoena duces tecum and summon witnesses to appear in their
proceedings and when appropriate, order the examination, search and seizure of all
documents, and books of accounts of any entity or person under investigation as may be
necessary for the proper disposition of the cases before them. Further, the BSP and SEC
shall have the authority to punish for contempt, both directly and indirectly, in
accordance with the pertinent provisions of and penalties prescribed by the Rules of
Court.

(g) Other Powers. - Financial regulators may exercise such other powers as may be
provided by their enabling laws or charters as well as those which may be implied from,
or which are necessary or incidental to the carrying out of, the express powers granted to
the financial regulators to achieve the objectives and purposes of these laws.

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:

(a) Trust Department/Unit of Banks;

(b) Stand-alone Trust Entities;

(c) Lawyer, accountant, engineer, or teacher whose performance of such services is solely
incidental to the practice of his profession;

(d) Insurance agent whose performance of such services is solely incidental to the
practice of his profession;

(e) Any investment banker or broker dealer whose performance of such services is solely
incidental to the conduct of his business as such investment banker or broker dealer and
who receives no special compensation therefor;

(f) The publisher of any bona fide newspaper, news magazine, or business or financial

publication of general and regular circulation; and

(g) Such other persons as the SEC may designate by rules and regulations, or appropriate
order.

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

(a) Board and Senior Management Oversight. - The Board of Directors and the members
of senior management of financial service providers shall ensure conformity with this Act
and shall provide the means by which they shall identify, measure, monitor, control, and
manage consumer protection risk inherent in their operations, in accordance with the
rules and regulations of their financial regulators.

(b) Appropriate Product Design and Delivery. - Financial service providers shall

continuously evaluate their financial products or services to ensure that they are
appropriately targeted to the needs, understanding and capacity of both their markets and
their clients. This shall include among others, the following:

(1) Affordability and suitability assessments. - Financial service providers should

have written procedures for determining whether a particular financial product or
service is suitable and affordable for their clients. This shall include the
determination of whether or not the amount and terms of the offered financial
product or service allow various clients to meet their respective obligations with a
low probability of serious hardship, and that there is a reasonable prospect that the
financial product o r service will provide value to its client. For the purpose of
extending credit, this assessment will include measures to prevent over-
indebtedness.
 (2) Cooling-off period. - Financial service providers are expected to adopt a clear
cooling-off policy, as may be prescribed by law or by rules and regulations issued
by the relevant financial regulator upon its determination that a cooling-off period
is necessary for a particular financial product or service that is subject to its
regulation. Such policy should, among others, provide a cooling-off period that
will 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. The
length of the cooling-off period should be individually determined by the
financial service providers based on reasonable expectation of the time required
for a client to fully evaluate all the terms and risks of the financial product or
service and contact concerned parties who may be affected by its terms and
conditions, unless a minimum or fixed period is prescribed by the financial
regulator for compliance by the financial service provider or when stipulated in
the terms of the financial product or service. Financial regulators may opt not to
provide for cooling-off period for short-term transaction or contracts.

During the cooling-off period, the financial consumer may cancel or return the
contract without penalty; however, nothing herein prevents the financial service
providers from recovering the processing costs incurred, as may be approved by
the financial regulators. Financial service providers are prohibited from engaging
in practices that unreasonably burden the financial consumer in the exercise of the
right of cancellation during the cooling-off period. If the financial product or
service is a contract of insurance, a pre-need or a health maintenance organization
(HMO) product, the right of return cannot be exercised after the financial
consumer has made a claim.

(3) Pre-payment of loans and other credit accommodations. - A borrower may, at

any time prior to the agreed maturity date, prepay a loan or other credit
transactions in whole or in part: Provided, That costs or fees charged to the
borrower for such pre-payment, if any, shall be disclosed to ensure transparency,
disclosure, and responsible pricing as required under this section.

(c) Transparency, Disclosure, and responsible Pricing. - Financial service providers must

ensure that they adopt disclosure principles in their communications and their contracts
with financial consumers, including the use of clear and concise language to ensure that
all information concerning the financial product or service is understood by the target
clients. This shall also include updated and accurate disclosure of information such as
pricing or any cost associated with the product or service, and should be made in a
consistent manner to facilitate a comparison between similar financial products or
services across the industry.

Sufficient product disclosure must be provided before the contracting of the financial
product or service to give the client enough basis and time for review. Any change in the
terms or conditions of a financial product or service shall be provided to the client.
In their advertising materials, financial service providers shall disclose the contact
information of their consumer assistance unit providing consumer assistance and
handling financial consumer complaints. Financial service providers shall also disclose
that they are regulated and the advertising materials must identify the relevant financial
regulator.

Financial service providers are legally responsible for all statements made in the
marketing and sales materials that they produce relative to their financial products or
services. Disclosure of information on financial products or services shall be made
available to the public by the financial service provider through printed materials, mass
media, websites or digital platforms.

Financial service providers must have internal policies and procedures for setting prices
for their products and services that take into consideration, among others, the principle of
responsible pricing.

(d) Fair and Respectful Treatment of Clients. - Financial service providers shall have the
right to select their clients: Provided, That they shall not discriminate against clients on
the basis of race, age, financial capacity, ethnicity, origin, gender, disability, health
condition, sexual orientation, religious affiliation, or political affiliation: Provided,
further, That financial service providers may provide distinction, as necessary, when
making a risk assessment on a specific financial product or service.

Financial Service providers are prohibited from employing abusive collection or debt
recovery practices against their financial consumers.

(e) Privacy and Protection of Client Data. - Each financial service provider must respect
the privacy and protect the data of their clients. Consistent with the provisions of
Republic Act No. 10173, otherwise known as the "Data Privacy Act of 2012", the
financial regulators shall issue regulations in coordination with the National Privacy
Commission, governing the disclosure of client data to a third party.

Clients have the right to review their data to ensure that inaccurate or deficient data is
corrected or amended, refuse the sharing of their information to a third party and request
the removal of their data from the service provider's system if they no longer wish to use
the provider's services.

(f) Financial Consumer Protection Assistance Mechanism. - Each financial service

provider must establish a single consumer assistance mechanism for free assistance to
financial consumers on financial transactions concerns. This shall include handling of
complaints, inquiries and requests.

A financial service provider must provide clear information on the actions taken or to be
taken on a complaint, inquiry or request from a financial consumer. In the case of alleged
disputed amount or unauthorized transactions, a financial service provider, pending the
 result of its final investigation report, shall suspend the imposition of interest, fees and
charges, or provide similar reasonable accommodations to the financial consumer.

Financial consumers who are unsatisfied with the financial service provider's handling of
their complaints, inquiries and requests, may elevate their concerns to the financial
regulator which has jurisdiction over the financial service provider concerned.

(g) Information Security Standards. - Financial service providers shall adopt and

implement information security standards to ensure the safety and protection of the
confidentiality, integrity, availability, authenticity, and non-repudiation of the client's
information and financial transactions and to ensure the data privacy of their clients. The
financial regulators shall prescribe the minimum information security standards for
compliance by all 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.ℒαwρhi ৷

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,

(SGD.) LORD ALLAN JAY Q. VELASCO (SGD.) VICENTE C. SOTTO III

Speaker of the House of Representatives President of the Senate

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.

(SGD.) MARK LLANDRO L. (SGD.) MYRA MARIE D.

MENDOZA VILLARICA
Secretary General Secretary of the Senate
House of Representatives

Approved: MAY 06 2022

(SGD.) RODRIGO ROA DUTERTE

President of the Philippines