Bangko Sentral ng Pilipinas (File photo / Philippine Daily Inquirer)
The Bangko Sentral ng Pilipinas (BSP) is proposing guidelines that banks belonging to financial conglomerates must follow when cross-selling products from related providers, ensuring that consumers are well-protected from investment risks and misleading product information.
The BSP is collecting comments from stakeholders on a draft circular that will amend parts of the manual of regulations for banks (MORB) pertaining to cross-selling, or when a bank sells to a client financial products other than its own offerings.
Lenders have until Dec. 4, 2024 to give their feedback.
Simply put, the proposal seeks to “expand” the scope of the regulations to include cross-selling activities of banks that belong to financial conglomerates and therefore can be considered as an “allied undertaking”.
Also, banks that are part of large financial groups can only cross-sell products created or distributed by providers related to them. Such offerings, which can be sold inside bank premises, include retail lending or loan products like credit cards, as well as deposits and insurance, among others.
The BSP said these products may be offered on a stand-alone basis or bundled with financial products of the banks.
Lenders may subsequently offer additional products of their related providers without prior approval of the BSP, as long as such offerings “are similar in nature and expose the customer to the same type of risks.”
Overall, the central bank said the client must have “the right to product choice subject to reasonable standards set by the bank.”
To help the customers decide, the BSP said the advertising materials for products that can be cross-sold “shall not include false, misleading, or contain deceptive statements or omit key information.”