New BSP initiative to make it easier for Filipinos to invest in mutual funds

MANILA, Philippines — Financial institutions will soon be able to offer mutual funds to investors through third-party distribution channels, thanks to new guidelines approved by the central bank — a move that will help Filipinos channel more of their savings into higher-yielding investments.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said its Monetary Board recently approved the guidelines that will allow trust corporations to distribute their unit investment trust funds — pooled assets of clients managed by professional investors — through third parties, specifically individual and institutional agents.

This initiative supports the central bank’s advocacy to promote financial inclusion by broadening access points to innovative financial products and services.

“Through this policy, agents are expected to bring products closer to investors. At the same time, it is an opportunity for the industry to grow assets under management through partnerships with distributors,” BSP Governor Benjamin Diokno said. “More products in the market will also bode well for capital market development.”

At present, the bank’s trust corporations distribute their mutual fund-type products only through their main offices. The new rules, however, provide other channels that may be used by trust corporations to offer their products.

For this purpose, third-party providers must abide by stringent qualification standards in order to qualify as distributors.

Individual agents and employees of institutional agents are required to meet the qualifications for trust fund marketing personnel in existing regulations, while institutional agents must be reputable and duly licensed by appropriate regulatory agencies to distribute financial products.

The provisions in the forthcoming policy are anchored on the governance mechanisms and due diligence requirements under the existing outsourcing framework for BSP-supervised institutions. These ensure that trust corporations will only tap entities that have a sound understanding of these investment products and are well-regulated and have the necessary infrastructure to distribute them.

This development is part of the set of reforms being undertaken by the central bank to promote the growth of the trust industry.

Along this line, the BSP is set to revamp the regulatory framework for trust, investment management, and other fiduciary accounts by clearly laying out the expectations for the different activities performed by trust entities and streamlining regulatory requirements.

Earlier this month, Diokno launched a program that will allow Filipinos to make pension plan investments through their mobile phones — an initiative to bring the benefits of the 12-year-old Personal Equity and Retirement Account Law to more people.

The central bank chief explained that the digitalization of the process will enable accredited banks and financial institutions to provide convenient and affordable retirement saving products to more investors through more efficient channels.