BSP issues new credit card restrictions

Bangko Sentral ng Pilipinas (BSP). RYAN LEAGOGO/INQUIRER.net

Unsolicited phone calls from pushy credit card salesmen have now been banned as part of regulators’ ongoing efforts to protect consumers from accumulating excessive debt.

The practice of banks sending clients pre-approved credit cards has long been prohibited. New rules released this week now include bank personnel calling up clients to get them to apply for credit cards over the phone.

Existing regulations, particularly the Bangko Sentral ng Pilipinas (BSP) Manual of Regulation for Banks, prohibits lenders from giving out pre-approved credit cards. The BSP defines pre-approved cards as credit cards sent to clients who didn’t ask for them.

Rules state that banks and their subsidiaries “exercise… proper diligence by ascertaining that applicants possess good credit-standing and are financially capable of fulfilling their credit commitments.”

Circular 845, signed by Governor Amando M. Tetangco Jr. on Aug. 15, expands the definition of activities “tantamount to act of issuing pre-approved credit cards” to include unsolicited calls from banks.

Unsolicited calls by banks informing clients that they were granted new credit cards due to their good standing as borrowers are now also banned. Giving out cards as rewards for availing themselves of other financial products was also included.

Other restrictions include:

• the mailing of cards that are assumed “live” unless a client asks for termination;

• mailing cards that are assumed “live” upon the client’s receipt,

• and sending clients cards due to their good standing as depositors.

The new restrictions apply to both banks and their credit card-issuing subsidiaries.

Last year, the BSP tightened its watch on the use of credit cards in the country to ensure that consumers are protected from abuses such as shady lending practices. The BSP also wants to protect banks from excessive risk-taking that could threaten the stability of the financial system.

Banks were ordered to submit reports on the scope of their credit card operations, the number of issued and type of cards, fees and charges for transactions and credit limits for the average user.

The regulator said it wanted to “enhance the credit card database of both credit card issuers and cardholders, ensure transparency and availability of information on credit card operations and complaint resolution, and afford profound analysis on the credit card industry for policy-making.”

Data released last June showed consumer loans by universal, commercial and thrift banks stood at P735.1 billion at the end of the first quarter of the year—up 13.6 percent from a year ago. Bulk of these loans financed the purchase of new homes and cars.

Credit card loans, meanwhile, grew by just 6.76 percent in the same period.

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