Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday that the BSP may extend the imposition of a 2% cap on credit card interest rates for more than six months to help Filipinos better manage their credit card debt.
“This can be extended beyond the original six months,” he said after his weekly online “GBED Talks” briefing. This implies that credit card users will continue to have lower billing statements for the remainder of 2021. The BSP will review credit card rates and fees in May of this year.
To help financial consumers face the financial constraints due to the pandemic and benefit from more affordable pricing conditions, the BSP approved on September 24, 2020 a cap on credit card rates and fees as of November 3, 2020, an annual interest rate cap. 24 percent on all credit card transactions, meaning that interest rates or finance charges on a cardholder’s outstanding credit card balance will only be two percent per month . The monthly mark-up rate for credit card installment loans should also not exceed one percent per month and the processing fee on the use of credit card cash advances also should not exceed P200 per month. transaction.
The BSP reiterated on Thursday that the power to set limits on interest rates and charges for credit cards is based on the authority of the BSP under the Philippine Credit Card Industry Regulation Act. .
“BSP’s supervisory authority under the said law includes determining the reasonableness of fees and charges for credit card transactions and issuing regulations thereon,” BSP explained. “Thus, the BSP has flexibility in setting credit card interest, finance charges and fees in accordance with this legal authority.”
Meanwhile, Diokno said they were working closely with banks for “collective vigilance” to tackle credit card fraud and scams which increased alarmingly during the lockdown.
“Let me stress that collective vigilance against fraud is needed in the context of the increasing use of digital financial products and services during the pandemic.
Collective vigilance is seen as fostering greater confidence in the financial system in the context of the new economy, ”said Diokno.
Based on BSP’s Consumer Assistance Mechanism (CAM) and its chatbot BOB or BSP Online Buddy, some 23,000 complaints were registered in the fourth quarter of 2020. Around 20% or 4,600 were complaints about credit cards. credit and 12% of the total volume of complaints. relate to the implementation of the mandatory 60-day grace period for loan and credit card products under the two laws of Bayanihan.
All of these complaints have been forwarded to the senior management of the relevant banks for appropriate action, Diokno said. “Most of these complaints are resolved either through a repayment program or through loan restructuring,” he added.
Diokno said the BSP has noted an increase in financial crimes during the pandemic, but it’s not just credit card issues. “The main concern for credit cards in 2019 was disputed transactions, while credit card fees and charges were the main issue in 2020,” he said.
The most common types of fraudulent schemes involving credit cards are: disputed transactions due to disclosure of personal information; phishing emails; and violation of personal account information via OTP by telephone to a representative as a bank employee.
“According to BSP’s analysis, fraudulent credit card transactions typically involve information and identity theft; phishing and its variants; and card skimming and replacement programs. Note that unintentional disclosure of personal and account information can lead to unauthorized use of the credit card, ”Diokno said.
The BSP has issued numerous directives and regulations requiring all financial institutions supervised by the BSP to have “strict IT security controls and good risk management practices, and to adopt standard technology such as the multi-factor authentication system for online transactions ”.
The reporting requirements of banks on cybersecurity incidents and operational disruptions have also been tightened to ensure consumer protection in the event of an actual attack, Diokno said.
“BSP is ready to deploy its full suite of surveillance tools to foster market discipline and protect the rights and interests of consumers in an expanding digital landscape,” he said.
PASB’s information campaign against credit card fraud, its digital literacy program and the promotion of electronic security ensure consumer protection.
“BSP believes that electronic security is a collective responsibility,” said Diokno.
On January 14, the Monetary Board approved a circular letter – one of many on credit card issues – reminding banks and credit card issuers to strictly follow the rules to protect credit card users , in particular the regulations in force on credit cards and the protection of financial consumers. such as the implementing rules and regulations of Article 4 (aa) of Republic Law No. 11649 or The Bayanihan to Heal as One Act, and Article 4 (uu) of RA No. 11494 or The Bayanihan to Recover as One Act.
The circular letter was issued “given the high number of credit card complaints received,” according to BSP Deputy Governor Chuchi G. Fonacier, who signed the note.
At the end of November 2020, the BSP reported some 415.50 billion pesos in credit card loans or receivables, compared to 352.36 billion pesos in the same period in 2019.
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