BSP warns banks, lenders: Be fair with delinquent credit-card holders

FOR perhaps the nth time, the Bangko Sentral ng Pilipinas (BSP) reminded banks and credit-card companies on Friday to engage in fair and reasonable behavior when collecting from delinquent cardholders.

It reminded industry players there are appropriate penalties for overzealous collectors that could result in the exclusion of card issuers, most of them banks, from the credit facilities of the central bank that all financial institutions need from time to time, for example.

Recalcitrant violators may also be prohibited from the business of extending credit accommodation if it comes to that.

According to the BSP, the use or threat of violence or other means to harm the physical person, reputation or property of any person is particularly prohibited.

“The use of obscenities, insults or profane language which amount to a criminal act or offense under applicable laws; disclosure of the names of credit-card holders who allegedly refuse to pay debts; threat to take any action that cannot legally be taken and communicating or threat to communicate to any person credit information which is known to be false, including failure to communicate that a debt is being disputed” were also strictly prohibited.

Also, any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a cardholder is also against the regulations.

The BSP said making contact at unreasonable or inconvenient times, under certain parameters, is also strictly prohibited.

Considered unreasonable or inconvenient are contacts before 6 in the morning and after 10 in the evening unless the amount past due is more than 60 days or if the cardholder himself has express permission to contact them at these hours are the only reasonable and convenient opportunities for contact.

The BSP stressed these rules against banks like the Philippine National Bank, the HSBC, the Bank of the Philippine Islands (BPI), Banco de Oro (BDO) and others give more emphasis on the conduct of consumer activities this year over so-called corporate lending.

PNB president Eugene Acevedo told reporters the bank will be known more as a consumer-oriented bank than as a corporate bank from now on and has engaged in a branch and automated teller machine expansion and optimization program for the purpose.

BPI president Aurelio Montinola III said as much in paying homage to consumer activities as key profit driver for the lender whose lending activities was programmed to grow by at least 10 percent this year.

BDO president Nestor Tan has also forged an alliance with the biggest name in credit cards in China, called China Union Pay, to take advantage of the anticipated inflow of tourist and business traffic between Manila and key Chinese cities as Beijing, Shanghai and Xiamen.

Regulators believe that credit-card rates and other charges are best left to the market but stress, at the same time, that such should be made as transparent as possible.

Some six years earlier, credit-card collection practices were so horrible, the BSP was forced to issue BSP Circular 398 that spelled out for the first time what was acceptable collection behavior and what was not.

Officials refused to acknowledge some of the more onerous practices, such as publicly announcing the amount of credit-card debt of one hapless cardholder, resulted in the citation and punishment of certain card issuers.

But the threat of bodily harm or legal prosecution knowing that such cannot be pursued through legal means will no longer be tolerated from this point on, the BSP said. –Jun Vallecera / Reporter, Businessmirror