Preneed firms shut down amid global crisis

THE Securities and Exchange Commission (SEC) said three preneed companies have shut down amid the global financial crisis.

In a notice to the public, the SEC warned that “Legacy Consolidated Plans Inc., Scholarship Plan Philippines Inc. and All Asia Plans Corp. have unilaterally ceased operations without obtaining the prior approval of the commission.”

In December last year, Legacy Consolidated and Scholarship Plans, along with eight other preneed firms, rendered petitions for voluntary dissolution before the regulator.

“When they came to us with an application, there was an indication who they would like to have as a receiver. But our general counsel would have to evaluate the documents they have submitted and find out if it’s not complete because right now we do not even know who to get in touch with,” Fe Barin, SEC chairperson, said Friday on the sidelines of the Bangko Sentral ng Pilipinas (BSP) anniversary celebrations.

“Merong lawyer na nagpupunta. Hindi naman kelangan kasi yung owners mismo. We write the directors and officers pero yung dissolution lang the lawyers will take care of it. If they are not the right lawyers, the right people from whom we are requiring something, then we cannot act on them,” she said.

The owner of Legacy Consolidated also controls the group of rural banks that the BSP recently placed under receivership with state-run Philippine Deposit Insurance Corp. (PDIC).

With the closure of the three preneed firms, the SEC said it is taking “all necessary actions under the circumstances to ensure the preservation of the existing trust funds of the three preneed firms so that their proceeds can be used to pay the claims of legitimate planholders.”

The SEC recently issued new rules on the registration and sale of preneed plans.

Under section 16 of the Securities Regulation Code, each of the three firms is mandated to put up a trust fund for each type of plan so that they can deliver the promised benefits to planholders.

These trust funds are supposed to be controlled and managed by trust companies or trust departments of banks or investment houses licensed by the BSP.

“The trustees are required to exercise due diligence in the performance of their duties and responsibilities in order to protect the interests of the planholders,” the SEC said.

In light of the closure, the SEC is asking planholders to file their sworn complaints with the regulator’s Non-Traditional Securities and Instruments Department on or before March 31 this year.

The complaint should include information on their present and complete mailing address and contact numbers together with a copy of their plan contract, certificate of full payment and other relevant supporting documents.

In December, the SEC relaxed its capital and trust fund requirements for preneed firms after the Philippine Federation of Pre-need Plan Companies claimed “unrealized” erosion in value of member firms’ trust funds due to mark-to-market accounting standards.
— Chino S. Leyco, Reporter with Likha Cuevas-Miel, Manila Times