week 17

• Regulatory body


  A public organization or government agency that is responsible for legally regulating aspects of human activity
• Role of a regulatory body


  1. Impose requirements, conditions, and restrictions on businesses and organizations

  2. Draft, issue, and revise standards

  3. Conducting inspections and audits

  4. Enforcing standards by issuing fines and other consequences for violations

  5. Promoting fair trade

  6. Protecting consumers

  7. Adjudicating controversies

  8. Conducting hearings

  9. Providing ordinary administrative services
• Regulation


  The written rules that define acceptable behavior and conduct for financial institutions
• Supervision


  The enforcement of these rules
• Goal of regulation


  • Prevent and investigate fraud
  • Keep markets efficient and transparent
  • Make sure customers and clients are treated fairly and honestly
• Financial Institution


  An establishment that conducts financial transactions such as investment, loans and deposits
• Categories of financial institutions in the Philippines

  • Banks (universal, commercial, thrift, rural and cooperative)
  • Non-banks with quasi-banking functions (financial cooperatives, savings and loans associations, pawnshops and microfinance institutions)
• Bangko Sentral ng Pilipinas (BSP)

  The central bank of the Philippines responsible for developing banking regulations and supervising financial institutions
• Supervisory powers of BSP

  • Issuing rules of conduct and standards
  • Conducting examinations
  • Overseeing compliance with laws and regulations
  • Regular investigations
  • Inquiring into solvency and liquidity
  • Enforcing prompt corrective action
• Philippine Deposit Insurance Corporation (PDIC)


  A government-run corporation providing deposit insurance coverage to member banks and serving as the principal resolution authority for insured institutions
• Functions of PDIC

  1. Deposit insurer (providing maximum coverage of PhP500,000 per depositor per bank)

  2. Co-regulator of banks (conducting examinations and issuing regulations)

  3. Receiver of closed banks (managing and disposing of assets to settle creditor claims)
• Securities and Exchange Commission (SEC)


  The national government regulatory agency charged with supervision over the corporate sector, the capital market participants, and the securities and investment instruments market, and the protection of the investing public
• Powers and functions of SEC

  • Have jurisdiction and supervision over corporations, partnerships or associations
  • Formulate policies and recommendations on the securities market
  • Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications
  • Regulate, investigate or supervise the activities of persons to ensure compliance
  • Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other SROs
  • Impose sanctions for violations
  • Prepare, approve, amend or repeal rules, regulations and orders
  • Enlist the aid and support of enforcement agencies
  • Issue cease and desist orders
  • Punish for contempt
  • Compel officers to call meetings of stockholders or members
  • Issue subpoena duces tecum and summon witnesses
  • Suspend, or revoke the franchise or certificate of registration of corporations, partnerships or associations
  • Exercise other powers provided by law
• Insurance Commission


  A Department of Finance (DOF) associated agency that regulates the insurance business
• Revised Securities Act or BP 178

  Repealed CA 83 in 1982 to give way to a new statute that would enable the SEC to keep pace with new and more complex securities instruments, trading vehicles and strategies. Provided for a more sophisticated disclosure mechanism of securities to be offered to investors.
• Securities Regulation Code (SRC) or Republic Act (RA) 8799


  Provided for the SEC reorganization to give greater focus on the Commission's role in capital market development, fostering good corporate governance and enhancing investor protection.
• Section 68 of the SRC

  Reinforced the power of SEC to make, amend and rescind such accounting rules and regulations as may be necessary to carry out the provisions of the SRC and those of the CCP relative to financial reporting.
• Insurance Commission


  The main organization or executive body that regulates the insurance sector in the Philippines. It sets rules and regulations for the functioning of the insurance industry. Its sole purpose is to protect the interest of policyholders and to develop the industry on the whole.
• Insurance Commission

  • Safeguards the interests of the insured
  • Assists in the orderly growth of the insurance business for the benefit of the general public
  • Provides long-term financing to help the country's economy grow
  • Promotes, establishes, enforces, and monitors high standards of integrity, fair dealing, financial soundness, and insurance provider competence
  • Ensures that legitimate claims are resolved quickly and efficiently
  • Established a grievance redress forum to protect policy holders from malpractice and fraud
  • Encourages the financial markets to conduct insurance in a transparent, fair, and methodical manner
  • Creates a dependable management system that ensures good quality
• Functions of Insurance Commission

  1. Grant, renew, modify, suspend, revoke, or withdraw registration certificates for insurance firms

  2. Protect the policy holder's interests in topics such as policy grant, claim settlement, nomination by policyholders, insurable interest, policy surrender value, and other policy terms and conditions

  3. Provide a code of conduct, credentials, and training for mediators or insurance agents

  4. Establish a rule of conduct for loss assessors and surveyors

  5. Impose fees and charges in order to carry out the Act's provisions

  6. Conduct inspections, requests for information, and investigations of insurance companies, middlemen, and other organizations involved in the insurance sector, including an audit

  7. Regulate and control insurance premiums, terms and circumstances, and any benefits that insurance companies may offer
• Types of insurance regulated by Insurance Commission

  • Life Insurance: Term Plans, Endowment Policies, Unit-linked Insurance Policies, Retirement Policies, Money-back Policies
  • General Insurance: Health Insurance Policies, Vehicle/Motor Insurance Policies, Property Insurance Policies, Travel Insurance Plans, Fire Insurance Plans
• Cooperative Development Authority (CDA)


  The government agency responsible for registering and regulating cooperatives in the Philippines to be allowed to operate legally in the country.
• Cooperative Development Authority

  • Requires at least 15 people before registering a cooperative, and the organization must include the word "cooperatives" in its title
  • Provides end-to-end assistance to local and foreign enterprises seeking to register and secure compliance with CDA
• Benefits of a Cooperative to a Community

  • Accessibility and Availability: Cooperatives hand over quality goods and services such as loans, banking, partnerships, etc., to locations far from big cities usually occupied by major corporations
  • Circulation of Funds: Most cooperative members are residents; therefore, the cooperative's financial profits circulate and are managed within the said community only
  • Making More Connections: A cooperative ensures to keep close membership of people in the community. As a result, everyone in the cooperative makes a benefit
  • Career opportunities: Building a cooperative means needing a workforce, and once it does a new project, it will need more people working, creating a long list of job availability
• Functions of Cooperative Development Authority


  1. Registration: Registers cooperatives including amendments thereto

  2. Monitoring: Develops, reviews and enhances regulatory standards, tools and other benchmarks to guide objective assessment of cooperative performance; Monitors the implementation of regulatory policies, guidelines, rules, regulation, orders and other issuances of the Authority; Monitors the performance of cooperatives through reports, feedbacks and information gathered from inspections and examinations to ensure its safe and sound operations; Requires all cooperatives of all types and categories to submit annually the required reports including the Annual Tax Incentive Report Form (Annex A), other documents and information and ensures compliance hereof; Acts as custodian of the required inspection, investigation, examination reports, other pertinent documents and copy of Certificate of Compliance (COC) issued to cooperatives; Recommends provision of appropriate intervention/assistance to cooperative when necessary; Recommends imposition of sanctions and/or remedial intercession for violations committed by cooperatives; Conducts Examination/Investigation when the inspection yields findings that warrant subsequent examination, upon a written complaint from any interested parties or upon a written complaint from any member or officer of a cooperative or any party in interest involving any irregularity or anomaly committed in the cooperative, upon a directive/request from other government agencies; Analyzes the inspection reports submitted to guide the Institutional Development Department (IDD) and Cooperative Surety Fund Department (CSF), in the formulation of intervention programs for cooperatives
• Republic Act No. 8791: The General Banking Law of 2000


  Establishes the fundamental rules guiding the activities of banking institutions in the Philippines. It addresses critical aspects such as risk management, capital adequacy, and governance. It also ensures the soundness and prudence of banking operations, upholding the financial stability of banking institutions and, thus, the consumers as well.
• Republic Act No. 11765: The Financial Products and Services Consumer Protection Act (FPSCPA)


  Issued by the BSP in 2022 to protect consumers in the Philippines' financial markets. It establishes rigorous standards for transparency, fair market conduct, and dispute resolution—applicable to all financial products and services. Moreover, it assigns BSP-supervised institutions (BSIs) to develop robust consumer protection systems.
• Republic Act No. 9160: The Anti-Money Laundering Act (AMLA)

  Enacted in 2001 to combat money laundering activities that enable criminal activities to continue. Under AMLA, financial institutions must verify customer identities, maintain detailed records, and promptly report suspicious transactions to the authorities.
• Republic Act No. 3591: Philippine Deposit Insurance Corporation (PDIC) Charter


  Mandates that all legally operating banks must have deposit insurance coverage with the PDIC. The insurance assures depositors they can recover their funds up to ₱500,000 in the unfortunate event of their bank's failure.
• Republic Act No. 8792: E-Commerce Act of 2000


  Ensures the security and reliability of online transactions in which businesses and financial institutions actively participate. It mandates using electronic signatures and establishes provisions for securing data during e-commerce dealings.
• Republic Act No. 10173: Data Privacy Act of 2012


  Requires obtaining consent before getting and processing customer data. It also imposes strict requirements for secure data storage and handling procedures.
• BSP Circular No. 1019 Series of 2018: Framework for the Management of Technology Risk


  Establishes a comprehensive framework for technology risk management within financial institutions. It underscores the crucial role of the board and senior management in overseeing technology-related risks.