BSP revises cross-selling framework

The Bangko Sentral ng Pilipinas (BSP), through its policy-making body the Monetary Board, has liberalized the framework for the cross-selling of financial products by banks.

Under the new guidelines, banks may use their premises to market and sell the financial products of their related parties under a banking group or a financial conglomerate, the BSP said Tuesday.

“This reform initiative makes available to consumers a broader array of financial products using the existing branch network of the banking system,” said BSP governor Amando Tetangco Jr. in a statement.

Cross-selling is an international practice that separates the production of a financial product or service from its distribution.

Under the MB-approved guidelines, bank premises are used as an access point for financial products offered by related parties.

Aside from allowing all types of banks to perform cross-selling, the new rules also dispense with the submission of product by product documentary requirements under the previous guideline.

While documentary requirements have been streamlined, governance standards have been strengthened. An oversight mechanism specific to cross-selling has been outlined in the new rules. Among others, a complaints handling mechanism has been instituted.

“The BSP is cognizant of the need to sustain high standards of risk management. This is the reason why we limit the products to those without investment risk and allow only banks with CAMELS rating of at least 3 to perform cross-selling,” Tetangco said.

CAMELS stands for capital adequacy, asset quality, management, earnings and liquidity rating system.

Financial products that might be included in the cross-selling are credit cards; auto, home mortgage, personal and other retail loans; term, life, non-life and other protection-type insurance products; cash, debit and related products; and other similar financial instruments that maybe authorized by the Monetary Board. — KBK, GMA News