R.A. 11765 – Financial Products and Services Consumer Protection Act

Paolo O. Hernandez

The COVID pandemic has brought forth the unprecedented expansion of digital financial systems. At the height of the pandemic, quarantine measures were at their strictest. The average Filipino could not help but rely on delivery services booked online and, more often than not, likewise paid online.

The advent of the nascent digital financial landscape, however, became fertile ground for unscrupulous individuals to take advantage of. Notable are online investment scams, such as the so-called Repa Paluwagan scam and many more. Phishing scams have also become commonplace, especially with the recurring spam text messages that Filipinos are currently hounded with that has led one of the largest telecom companies to block mobile text messages with internet website links. The increased exposure of the average Filipino to the digital financial landscape has increased his/her vulnerability to such fraudulent schemes.

It is against this backdrop that Congress eventually enacted Republic Act No. 11765 (R.A. 11765) or the Financial Products and Services Consumer Protection Act, in order to protect the average financial product and service consumer from these unscrupulous practices and to provide victims thereof a convenient means to seek redress.

Financial Products and Services

The law seeks to reinforce the confidence of financial products and service consumers in the financial system by strengthening the regulatory powers of financial regulators. Under R.A. 11765, these financial regulators refer to the Banko Sentral ng Pilipinas (“BSP”), Securities and Exchange Commission (“SEC”), Insurance Commission (“IC”), and the Cooperative Development Authority (“CDA”). The financial products or services covered by the law and within the respective jurisdictions of these financial regulators 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, including those financial products and services accessed and delivered through digital channels.

Financial Regulators

Pursuant to the purpose of the law, financial regulators are granted the following powers, among others:

Market Conduct Surveillance and Examination

Financial regulators are authorized to conduct surveillance and examination on their respective supervised financial service providers to ascertain whether these providers are compliant with R.A. 11765.

Market Monitoring

Financial regulators have the authority to require their respective supervised financial providers to submit reports or documents. The regulators may also obtain relevant financial data from government agencies. Under the draft implementing rules of the BSP, market monitoring may include analysis of complaints statistics, identifying market conduct risks, industry consultations, social listening, or media monitoring for relevant news and consumer sentiments.


Financial regulators are given a host of enforcement powers under the law, such as 1) authority to restrict a financial provider’s collection of excessive or unreasonable interests, fees, or charges; 2) disqualification and/or suspension of corporate officers; 3) imposition of fines and penalties; 4) issuance of a cease and desist order without need of prior hearing to restrain acts amounting to fraud or in violation of the law; 5) order the suspension of operations of any supervised financial provider; and 6) issue orders for disgorgement of profits obtained or of losses avoided by violating the law.

Financial Consumers’ Remedies

At times, it becomes unavoidable that disputes may arise concerning the financial products or services offered by financial providers. In fact, then BSP Governor Benjamin Diokno revealed during the Senate deliberations of the law that the BSP has received 42,456 complaints from 2020 to 2021 only. From 2019 to 2021, the amounts involved in the complaints reached two billion pesos (Php2,000,000,000.00). Further, the IC itself had received 2,992 complaints against insurance and pre-need companies, and the SEC had received hundreds of investment scam complaints.

Hence, financial product/service providers are obliged to establish a single consumer assistance mechanism to assist their financial consumers on financial transaction concerns, including complaints, inquiries, and requests. The providers must be transparent with the consumers regarding the actions they take on such complaint, inquiry, or request. In case the financial consumer is unsatisfied with the provider’s assistance, they may elevate their complaint, inquiry, or request with the financial regulator having jurisdiction over the financial product/service provider.

Particularly, the law expressly granted the BSP and SEC adjudicatory powers over financial transactions purely civil in nature where the claim or relief prayed for by the financial consumer does not exceed ten million pesos (Php10,000,000.00). For the IC and CDA, R.A. 11765 affirmed their authority to adjudicate all actions under existing laws.

The decisions of the financial regulators are final and executory. Hence, instead of going to court, financial consumers are provided with this alternative and speedy avenue to redress their grievances against financial product and service providers. Incidentally, this will also decongest the already clogged dockets of Philippine courts.

Duties of Financial Products and Services Providers

R.A. 11765 also imposed duties on financial service providers themselves. These providers are mandated to ensure that their financial products or services are appropriately targeted to the needs, understanding, and capacity of their clients. They must actively ensure that a financial product or service is suitable and affordable for their particular client.

They are likewise mandated to provide financial consumers a cooling-off period for its financial products and services as may be necessary and as determined by the rules and regulations issued by their respective regulators. This period will allow the financial consumer time to consider the costs and risks of a financial product or service to himself/herself. During this period, the financial consumer is allowed to return or cancel the financial contract without penalty. This is particularly significant for long-term financial transactions.

R.A. 11765 also grants borrowers the right to prepay a loan or other credit transaction, without prejudice to fees for such pre-payment. These fees must, however, be disclosed to the financial consumer in the interest of transparency.

Finally, the law declares unlawful a provision in any financial product or service where a financial consumer waives or is deprived of a legal right to sue the financial service provider, receive information, have their complaints addressed and resolved, or have their non-public data protected.

Indeed, under the law, financial consumers are aptly protected through the respective financial regulators. They are likewise provided with an expeditious remedy that promises to provide definite remedies. R.A. 11765 now forms part of the many consumer protection laws in the Philippines, such as R.A. 3765 or the Truth in Lending Act and R.A. 7394 or the Consumer Act, that implement the Constitution’s policy of ensuring the protection of Filipino consumers.

This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.

Paolo O. Hernandez is an associate of the Litigation and Dispute Resolution Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).

[email protected]
(632) 8830 8000

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