Bill regulating credit card industry up for PNoy’s approval

A bill proposing the regulation of the country’s credit card industry by putting it under the supervision of the Bangko Sentral ng Pilipinas (BSP) is awaiting President Benigno Aquino III’s signature before it becomes a law.

The proposed Philippine Credit Card Industry Regulation Act shall govern all credit card issuers, acquirers and all credit card transactions. It mandates the BSP to supervise all credit card issuers and acquirers.

Under the measure, credit card issuers and collection agents are prohibited from engaging in abusive and unfair practices against cardholders and issues rules of conduct or standards of operation.

The bill refers to credit card as “any card or other credit device intended for the purpose of obtaining money, property, or services on credit.”

The proposal gives the BSP the authority to supervise credit card issuers and acquirers with regard to the following areas:

• the issuance of rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered, and the imposition of penalties in case of noncompliance therewith;
• the conduct of examination as determined by the Monetary Board  to determine compliance with laws and regulations;
• and overseeing to ascertain that laws and regulations are complied with.

The BSP may also limit and prohibit the charging of annual membership fees for credit cards.

All existing credit card companies that are currently not under the BSP’s supervision will be given reasonable time, as the Monetary Board may determine, in order to comply with applicable rules and regulations.

The bill further provides that a credit card issuer may resort to a reasonable and legally permissible means to collect amounts due them under the credit card agreement. Provided that in the exercise of its rights and performance of duties, the card issuer must observe good faith, reasonable conduct and proper decorum and refrain from engaging in unscrupulous acts.

However, a credit card issuer or collection agent shall not harass, abuse or oppress any person or engage in any unfair practices, as may be deemed by BSP rules and regulations, in collection with the collection of any credit card debt.

The bill mandates credit card issuers to disclose to all credit cardholders and potential credit cardholders the following:

• finance charges for unpaid amounts after payment due date; 
• percentage that the interest bears to the total amount to be financed expressed as a simple monthly or annual rate, as the case may be, on the outstanding balance of the obligation;
• default, late payment/penalty fees or similar delinquency-related charges payable in the event of late payments.

The card issuers may thereafter implement changes in the credit limit applicable of the account based on their risk management policies and guidelines but will be required to inform the cardholder is notified of such changes.

Moreover, the cardholder may decline any credit limit increase.

The bill mandates credit card issuers, their officers, employees and agents to keep strictly confidential the data on the cardholder, except under when disclosure of information is with the consent of the cardholder; when the customer information is released, submitted or exchanged with credit information bureaus, industry association, or card association; and upon orders of court of competent jurisdiction or any government office or agency authorized by law, or under such conditions as may be prescribed by the Monetary Board of the BSP.

The provisions of Section 37 of Republic Act No. 7653, otherwise known as “The New Central Bank Act”, shall be made applicable to any credit card issuer, acquiring bank, their directors and officers including, but not limited to, the administrative sanctions that may be imposed, without prejudice to the criminal sanctions against the culpable persons provided in Section 25 hereof, for any willful violation of the law or any related rules, regulations, orders or instructions issued by the Monetary Board.

In addition to the administrative sanctions that may be imposed, the authority of the credit card issuer to issue credit cards may be suspended or cancelled by the BSP.

A person who willfully violates any provision of the measure or any related rules, regulations, order or instructions, issued by the Monetary Board shall be punished by imprisonment of two to 10 years, or by a fine of P50,000 to P200,000, or both, at the discretion of the court. — Xianne Arcangel/BM, GMA News