MANILA, Philippines – The Bangko Sentral ng Pilipinas has tightened its ban on the issuance of pre-approved credit cards to bank clients.
“The prohibition on the issuance of pre-approved credit cards by all BSP supervised financial entities with credit card operations… is enhanced by stressing, under said regulations, that the provisions of this circular shall prevail notwithstanding any contrary stipulations in the contract,” the central bank said.
The new amendments are carried under Circular No. 485, which greatly details the acts “tantamount” to issuing pre-approved credit cards by the banks, quasi-banks, and non-banking financial institutions, and their subsidiaries or affiliate companies.
These acts include sending credit cards to customers with no prior application or request that are required for application, and mailing unsolicited supplementary cards and other cards which are not a replacement of the consumer’s initial credit card.
The BSP has also prohibited “unsolicited calls by credit card issuers requesting updated information from selected clients in order to be entitled to receive credit card as a reward for his/her continued patronage of the bank’s other financial products.”
Unsolicited calls to clients telling them that they already have a credit card for having a “good standing” as a depositor are also not allowed.
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Banks were also forbidden from “sending of mails with credit card enclosed which will be deemed accepted upon the receipt of such card by a receiver, whether authorized or not.”
The central bank also stressed the ban against sending an unsolicited credit card already assumed to be accepted unless the customer requests the bank to terminate such, and sending cards guised as free offers to consumers.
The new circular is an enhancement of Circular No. 702, series of 2010, which was issued following concerns that pre-approved cards have exposed the public to cases of fraud.
The central bank requires banks and non-bank financial institutions with credit card operations to properly review applications for credit cards and ensure the customers have a good credit standing and are financially capable to fulfill their obligations.
A strict credit risk assessment process is required for all credit card applications, under the BSP’s Manual of Regulations for Banks. Moreover, applicants should be given a list of all the applicable fees, penalties, and interest rates on transactions so they are fully aware of the conditions taking on a credit card.