SEC issues proposed rules and regulations for FCPA
SEC MATTERS KELVIN LESTER LEE
The Manila Times
ON Jan. 20, 2023, the Securities and Exchange Commission (SEC) issued proposed implementing rules and regulations (IRR) of Republic Act 11765, or the “Financial Products and Services Consumer Protection Act of 2022” (FCPA). The IRR was released to implement Section 18 of the law, which mandates the SEC to formulate the necessary rules and regulations to implement the provisions of the FCPA within a year from its effectivity in 2022. The proposed IRR seeks to apply to all financial products and services, and financial service providers under the jurisdiction of the commission. Financial products and services are defined as financial products or services that are developed and/or marketed by a financial service provider and digital financial products or services that pertain to a broad range of financial services accessed and delivered through digital channels. A financial service provider, meanwhile, is one that provides financial products or services that are under the SEC’s jurisdiction. Some of the salient features of the draft IRR are as follows: – On the SEC’s rulemaking powers, the commission has the authority to formulate its own standards and rules for the application of FCPA provisions to specific financial products or services within its jurisdiction, guided by internationally accepted standards and practices, as well as issue rules of procedure concerning administrative actions arising from the implementation of the FCPA. – The commission will likewise have the authority to impose enforcement actions against financial service providers for noncompliance with the FCPA, its IRR and other related existing laws pertaining to the SEC’s jurisdiction and authority, which include disgorgement, adjudication and other powers. – Disgorgement occurs in any proceeding in which the commission may impose a penalty for noncompliance with or breach of the FCPA, IRR or other existing laws under its jurisdiction. The SEC, in addition to the imposed fine, may enter an order requiring accounting and disgorgement of profits obtained or losses avoided, as a result of a violation of the FCPA and other existing laws, including a reasonable interest. – The commission, through its authorized operating department or body, will have the authority to adjudicate actions arising from/in connection with financial transactions that are purely civil in nature, and the claim or relief prayed for by the consumer is solely for payment or reimbursement of a sum of money not exceeding the amount of P10 million. – The commission may also exercise such other powers as may be provided by its enabling law or charter, as well as those that may be implied from or are necessary or incidental to carry out the express powers granted to the commission in order to achieve the objectives and purposes of the FCPA and its IRR. – No provision of a contract for a financial product or service will be lawful or enforceable if such waives or deprives a client’s legal right to sue the financial service provider, receive information, have their complaints addressed and resolved, or have their non-public client data protected. – Finally, the SEC also has discretion under the proposed IRR to institute an independent civil action on behalf of aggrieved financial consumers for FCPA violations. Such filing will be without prejudice to the filing of criminal charges by the commission against the violators of the FCPA and the IRR. With the proposed IRR, the SEC — as a financial regulator — hopes for a more streamlined approach to protect the interest of the consumers of financial products and services. To know more, visit our official website and check the following link: https://www.sec.gov.ph/notices/requestforcommentssecfcpairr/. The SEC welcomes any feedback from the public. Kelvin Lester K. Lee is a commissioner of the Securities and Exchange Commission. The views and opinions stated herein are his own. You may email your comments and questions to firstname.lastname@example.org.