ARTICLE XVI Section 9: “The State shall protect consumers from trade malpractices and from substandard or hazardous products.” (1987 Constitution).
My concern is that in the banking sector, the State can do more to protect consumers from malpractice. The relevant government instrumentality is Bangko Sentral ng Pilipinas (BSP). It is responsible for maintaining a stable currency. I believe that by taking the appropriately prudent measures to offset problems that may arise, the BSP is successful in protecting the peso from excessive fluctuations.
But when it comes to the problems of individual customers, the picture is not so rosy. BSP officials work hard to try to establish fair treatment for customers who may have been shabbily treated, but the banks seem to be able to retain the upper hand. My experience is that banks are quick to invoke Republic Act 1405 – the bank secrecy Act. When the customer waives his right to any protection the Act may provide, it does not appear to be appropriate for the bank to be able to avoid giving information about a faulty transaction where the customer has suffered.
My recommendation is radical. I believe BSP’s role should be confined to the traditional central bank activity which deals with macro-economic fundamentals. The work of ensuring that customers are treated fairly when things go wrong should become part of the function of the Philippine National Police (PNP). This would necessitate the formation of a commercial crimes bureau (CCB) within the PNP.
The PNP is a particularly easy national government institution for the public to reach. When a complaint about a financial transaction is first submitted to a local police station, it can, at the station commander’s discretion, be forwarded to the CCB for further action.
The reason I would like the PNP to be involved is that I believe the PNP would be somewhat more adversarial with the bank wherein malpractice may have occurred than the BSP which the banks are able, in practice, to usually keep at arms’ length. Robust investigative techniques are required. Banks like to keep malpractice under wraps and to, if possible, quietly fire employees who have provably engaged in misconduct.
Another factor is that banks do not always comply with “instructions” from the BSP. A particularly bad example has occurred with ATM cards. By 2012 a new type of ATM card, with an embedded chip, became available. It is not possible to use a skimming device to capture data from this type of card. Consequently, BSP instructed banks to use the new ATM card from January 2013. Most, but not all, banks ignored this instruction. Hence, between especially 2013 and 2015, a huge number of customers became in dispute with their bank due to fraudulent use of their ATM cards. ATM machines were found to have skimming equipment which illicitly stole data which enabled fraudulent ATM transactions to take place. Disputes between customers and their bank ensued. Anecdotal evidence suggests that banks varied in their assessment as to whether the customers’ claims that they had been cheated were valid or not.
In a recent (May 21) article in PN by Herbert Vego, he mentioned a customer who lost much money and who has not been refunded.
I was luckier. In August 2014 I received a phone call from my bank (Security Bank) who asked whether I had been to some place in Luzon recently. My appalling ignorance of Philippine geography was in this case an advantage because I was able to claim that I had never been there. The bank believed me and, within a few days, refunded P40,000 which had been stolen from my account.
But circumstantial evidence points towards an inside job.
Which is why we need the PNP’s CCB to do the investigation./PN
