The Securities and Exchange Commission (SEC) said it now reserves the right to restrict brokers of investment products from imposing excessive fees or other charges on their clients, as part of its function as defined under the Financial Products and Services Consumer Protection Act (FCPA).
The authority forms part of a measure the SEC outlined in the FCPA’s implementing rules and regulations (IRR) which the agency has officially adopted.
The SEC said it also reserves the right to impose penalties like fines; disqualification and/or suspension of directors, trustees, officers or employees; issuance of cease and desist orders; suspension of operation; and disgorgement of profits of erring companies covered by the law.
Violators of the FCPA provisions face imprisonment of not less than one year, but not more than five years, or a fine of not less than P50,000 but not more than P2 million or both, as ruled by a court, the SEC said.
“Should the violation be committed by a corporation or a juridical entity, the directors, officers, employees, or other officers who are directly responsible for such violation shall be held liable,” it added.
According to the SEC, individuals found responsible for investment fraud may also be subject to administrative sanctions like a fine of P50,000 to P10 million for each count of investment fraud plus P10,000 for each day of continuing violation, aside from other administrative sanctions that it will impose.
Violators also face fines “not more than three times the profit gained or loss avoided” through the violation of the FCPA law, the SEC warned.
To protect the interests of financial consumers, the IRR requires financial service providers to integrate a consumer protection risk management system (CPRMS) into their enterprise-wide risk management processes and risk governance framework.
The CPRMS includes the governance structure, policies, processes, measurement and control procedures to ensure that consumer protection risks are identified, measured, monitored and mitigated.
The SEC said the board of directors of each company shall be primarily responsible for approving and overseeing the implementation of the CPRMS.
“To ensure the client’s full awareness of a financial product, the SEC now requires financial service providers to a cooling-off period of no less than three days, under which the financial consumer may consider the costs and risks of a financial product or service, free from the pressure of the sales team of the financial service provider,” the SEC added.
