Financial Consumer Protection Laws and Digital Payments

Technological innovation, which is a kind of digitalization, is continuously transforming local and international economies . The advent of numerous new products, services, digital payments, and distribution models by established market participants and new entrants like IT businesses, both large and small, has substantially impacted all sectors of financial products and services, from payments to banking and saving to insurance to investing.

Widespread use of digital financial service provider urge the government to create laws that will protect the public in consuming these services Photo by Anna Shvets from Pexels
Financial Consumer Protection Laws and Digital Payments | Widespread use of digital financial service provider urge the government to create laws that will protect the public in consuming these services Photo by Anna Shvets from Pexels

The increase in the collection and use of data, along with significantly improved computing, processing, and analytical capabilities through the use of data analytics and machine learning (artificial intelligence), has enabled financial services firms to continuously innovate to better serve their consumer and increase their profitability.

Due to greater internet and smartphone penetration and interoperability, consumer demand for simple, appealing, and affordable digital financial regulators or financial service providers has increased. This trend is likely to keep going as Gen Z and other tech-savvy and aware generations enter the job and financial markets.

Financial consumers benefit greatly from digitization since financial technologies give them more options at cheaper prices, increased speed, convenience, personalization, and security. They may promote increased access to financial services and goods, promoting financial inclusion.

Digitalization has brought financial services companies a number of benefits. Perhaps most importantly, it has made the companies more efficient. By automating tasks and processes, financial services companies have been able to reduce their costs and improve their bottom line. In addition, digitalization has made it easier for consumers to compare financial products and switch between them. This increased competition has been good for consumers, as it has driven down prices and improved the quality of financial products.

Finally, digitalization has made it possible for more financial services companies to enter the market. This increased competition has been good for financial regulators, as it has helped to keep prices down and improve the quality of financial products.

Read More: Top 10 benefits of Digital Transformation

The Bangko Sentral ng Pilipinas (BSP) announced earlier this year that as of the first quarter of 2021, around 53% of adult Filipinos have digital payment accounts, a major increase from the figure of 29% recorded in 2019. Online platforms accounted for one-fifth of all financial transactions in 2020.

However, there are additional consumer dangers related to digitalization that are peculiar to the financial services industry that need to be monitored and handled. These dangers include newly discovered theft, identity theft, fraud schemes, sudden lost funds online, data privacy violations, digital security problems, excessive data profiling that results in financial exclusion, and the manipulation of users’ behavioral biases when using the internet.

Furthermore, the risk associated with digital security is very dynamic, with new threats always emerging and new vulnerabilities being discovered that cause digital irreparable injury.

Fraud and theft in online business conduct has been rampant Photo by Mikhail Nilov from Pexels
Fraud and theft in online business conduct has been rampant Photo by Mikhail Nilov from Pexels | Consumer Protection Laws

Effective financial consumer protection, particularly data protection, is more necessary than ever in an increasingly digital economy and in light of these new and evolving risks. Financial consumer protection policy makers and monitoring organizations must adapt and change their rules and procedures to reflect the changing digital world.

Republic Act No. 11765, also called the Financial Products and Services Consumer Protection Act, and Executive Order 170 Series of 2022, also called the Adoption of Digital Payments for Government Disbursements and Collections, are two recent examples of government policies that protect consumers in response to the growing trend of digital transactions.

So, here is what you have to know about the Financial Consumer Protection Act.

What is Republic Act No. 11765 or the Financial Consumer Protection Act?

The term “financial consumer protection” refers to the system of laws, rules, and other measures that are typically intended to ensure that financial customers are treated fairly and responsibly when they buy, use, and interact with financial products.

One of the law’s sponsors, Senator Grace Poe, stated in January 2022 that as internet financial systems have expanded, they have turned into “fertile ground for numerous fraudsters, hackers, and unscrupulous individuals” who deceive the public. A law that strengthens consumer protection was therefore introduced.

What does Republic Act No. 11765 actually cover? The specifics of the statute are as follows:

Included financial services and goods

These include pre-need and health maintenance organization (HMO) goods, insurance, credit, savings, deposits, investments, payments, and remittances. Additionally, it encompasses goods and services obtained and provided via digital media.

Rights of financial consumers

The consumer protection laws defends the following financial consumers’ rights:

Right to equitable and fair treatment

This concept guarantees that all interactions between financial consumers and the BSFI (Bangko Sentral ng Pilipinas’ (BSP) supervised financial institutions) are conducted in a professional, ethical, and fair manner. BSFIs must implement safeguards to protect the interests of their customers, including policies and procedures, control functions, and agreements with external contractors that include standards for ethical staff conduct, acceptable sales tactics, just and equitable terms and conditions, and the provision of goods and services that are appropriate for their capacity and risk tolerance.

Right to disclosure and transparency of financial products and services

BSFIs (Bangko Sentral ng Pilipinas’ (BSP) supervised financial institutions) must make sure that customers have a complete sense of the products and services they may be purchasing or using. The crucial components that enable the consumer to make comparisons and wise financial decisions in this situation are full disclosure and maximum transparency, to the extent permitted by current laws and regulations. This is made possible by giving the customer easy access to information that accurately describes the nature and composition of the good or service, its terms and conditions, as well as its core advantages and dangers.

Right to protection of consumer assets to fraud and misuse

Initiatives for financial education provide people with the knowledge, abilities, and confidence to comprehend and assess the information they are given and to be in a position to make wise financial decisions.

Due to their close contacts with financial consumers, BSFIs (Bangko Sentral ng Pilipinas’ (BSP) supervised financial institutions) are well-positioned to provide financial education that is different from and separate from information about their products. The rights and obligations of customers and the BSFI should be made clear by BSFIs.

As part of their regular consumer interactions or as separate projects, BSFIs should show that they are making an effort to promote financial literacy, which may include digital literacy for goods sold online.

Right to data privacy and protection

Consumers of financial services have a right to expect that their financial transactions and during a transaction, any important personal information you give will be kept private and safe. To do this, BSFIs must make sure that their processing of the personal information of their financial customers is done in accordance with clearly stated information security policies, well-defined protocols, a secure database, and routinely re-validated procedures.

The range of information that will be pre-identified and collected, the reason and method for gathering each piece of information, the Information Technology (IT)-security infrastructure of the BSFI, and the protocols for disclosure, both within the BSFI and especially to third parties, should all be covered in this end-to-end process.

Right to timely handling and redress of complaints.

Financial consumers should have easy access to independent, impartial, fair, responsible, prompt, and effective mechanisms of resolving disputes over their financial transactions. BSFIs should have procedures in place for handling and resolving complaints, and they may make use of a variety of modalities or technology advancements.

Consumers has the right to demand in the financial service providers Photo by Ivan Samkov from Pexels
Consumers has the right to demand in the financial service providers Photo by Ivan Samkov from Pexels | Financial Consumer Protection Laws 

Powers of financial regulators

The following activities are permitted by law for regulators, including the BSP, Securities and Exchange Commission (SEC), Insurance Commission (IC), and Cooperative Development Authority (CDA):


Establishing standards and guidelines is necessary in order to guarantee that the provisions of the applicable laws are applied to a certain financial product or service.

Market conduct surveillance and examination

Investigate the processes that companies that provide financial services utilize to produce and disseminate their goods and services.

Market monitoring

Make the providers of financial services comply with your reporting or recordkeeping requirements.


Sanctions should be imposed on providers of financial services who fail to comply.

Consumer redress or complaints handling mechanism

Provide dispute resolution options to handle financial clients’ issues.


Make decisions about financial transactions that are strictly civil in character and in which the financial consumer’s appealing claim or relief is limited to the payment or reimbursement of an amount of money not exceeding P10 million.

Also, financial authorities are empowered by RA 11765 to create their own codes of conduct for financial organizations.

The R.A. 11765 protects both the civilians and providers against fraudulent acts in digital financing Photo by EKATERINA BOLOVTSOVA from Pexels
The R.A. 11765 protects both the civilians and providers against fraudulent acts in digital financing Photo by EKATERINA BOLOVTSOVA from Pexels | Digital Payments 

The Financial Consumer Protection Act’s approval is a significant victory for the real estate sector. It may provide you with legal recourse against fraudulent brokers who might knowingly obtain your account details and conduct illicit fund transfers.

So when a thought comes into your mind about purchasing a luxury house and lot in Metro Manila or near the area such as in Daang Hari Subdivisions, or you bumped into a luxury lot and luxury house and lot for sale , you are protected from unforeseen increases in your mortgage payments.

Welcome home to Portofino.

What is Executive Order 170 Series of 2022 or Adoption of Digital Payments for Government Disbursements and Collections?

President Duterte’s executive order mandating the use of digital payments for disbursements and collections is another recent example of pro-consumer legislation.

The outgoing President of The Philippines who signed the Executive Order 170 Series of 2022 Photo by Denniz Futalan from Pexels

The government’s goal to establish a “inclusive digital finance ecosystem” and support initiatives to enable the underserved and vulnerable sectors to access formal financial services are both in line with the digitalization of payments.

What does Executive Order 170 actually encompasses? The directive’s specific details are as follows:

Covered Government Agencies

All branches of government, including state and local governments, businesses that are owned or managed by the government, and educational institutions, are required to accept payments online.

State university students can now settle their financial accounts online photo by Keira Burton from Pexels
Financial Consumer Protection Laws and Digital Payments 

Digital Financial Services

Agencies may directly release funds into recipients’ transaction accounts for government payments. They can use banks that provide services to the government, like interoperable electronic financial transfers or suggestions for debiting accounts.

For now, government agencies will employ secure payment processing systems for government collections, such as payments for taxes, fees, tolls, and other charges and impositions. They can use a reputable payment service provider who adheres completely to the National Retail Payment System Framework.

In a similar vein, the government’s adoption of electronic payments marks a significant turning point for the real estate sector by enabling more convenient transactions.

Some local government agencies had previously implemented online real estate tax payment systems prior to the executive directive. People were able to take care of their financial duties while being safe and comfortable at home despite the pandemic’s limits on transportation.

A technical working group (TWG) is established by the EO to offer recommendations, encourage cost-efficiency, and oversee the procurement of digital payment solutions.

Representatives from the following offices and agencies make up the TWG’s membership:

– Department of Finance (DOF)
– Department of Budget and Management (DBM)
– Bureau of Treasury (BTr)
– Bureau of Internal Revenue (BIR)
– Government Procurement Policy Board (GPBB) Technical Support Office

The responsible technical working group (TWG) is entrusted with directing and overseeing covered agencies’ purchases of digital payment solutions and with considering the creation of uniform terms and conditions for payment service providers.


Given the increasingly digital landscape for financial services and products, which has been hastened by reactions to the COVID-19 epidemic, and the potential for digitalization to foster more financial inclusion. Effective financial consumer protection, inclusion, and growth for all are more crucial than ever. The policies and methods created and used by financial consumer protection authorities must also change and adapt to the ever-changing environment.

Financial customers can profit greatly from digitization, but there are new hazards as well. Positive consequences include improved speed, convenience, personalization, and security as well as greater access and choice of goods and services offered to consumers at cheaper prices. Risks include new types of online theft or fraud, data breaches, invasions of privacy, and occurrences involving digital security.

Next Read: 8 Ways to Connect with Your Neighborhood
Next Read: Philippine Real Estate Laws Guide