ABUC Survey on Sales of Financial Products and Services in ASEAN

1. ABUC Survey on Sales of Financial Products and Services in ASEAN Philippines Presented by Jose P. Umali, Jr. National President, National Union of Bank Employees (NUBE-PH)

2. Responsible lending & selling • Importance of the Issue: Topic is important in the light of the 1997-98 Asian financial crisis and today’s global financial crisis • Union Campaign on the Issue: UNI-PLC, NUBE in particular, has been campaigning against unbridled financial deregulation especially GATS-type liberalization • Deregulation/liberalization at the root of unproductive and risky behaviors that lead to bubbles and crises • Campaign done through position papers, seminars and social dialogue with appropriate government agencies (thru the Banking Industry Tripartite Council) and, often, in alliance with civil society organizations like the Fair Trade Alliance

3. Conditions of employment • Many banks pushing for performance-based or productivity-based pay • But with no or little consultation with unions • Issue has become a long-running irritant between the banks and the unions • Clearly beneficial for banks but not for employees • Unions prepared to support productivity programs but under fair and consultative conditions • Employees training to enable them to give qualified and professional advise. Senior bank officers and account executives get training but the quality of the training is difficult to assess

4. Legislative framework • Existence of legislative framework or CoC on responsible sale of financial products. Central Bank requires bank managers to go thru CSR and Code of Conduct seminars • There are existing law restricting transactions among director-members of banks • Observance of the law and the CSR/CoC is another matter • Codes of Conduct are voluntary • There is no clear mechanism in place to ensure implementation of CoC

5. Legislative framework • There is no consumer or banking ombudsman. But some banks have so-called “independent” directors • Assessment of legal provisions on responsible sale of financial products. Selling of financial products is supposed to be well regulated because the Philippines experienced a series of financial crises (early 1970s, early 1880s, late 1990s) but: • Some non-banking financial institutions have escaped regulation and scrutiny and have caused widespread havoc in the lives of some investors and clients (e.g. pre-need products like education plans) • Some rural banks oversold their assets to different institutional and individual buyers-investors

6. Best Practices • Companies exhibiting best practices. Banks where NUBE has unions or where the bank has good union relations are also responsible banks (e.g. Banco de Oro, Metrobank) • Companies showing poor practice. Some rural and smaller banks have escaped the scrutiny of Central Bank and got away with questionable and shady financial transactions. • A number of insurance and pre-need companies encountered bankruptcies or liquidity problems • No union member has been question by customers or the authorities on sale/promotion of questionable financial products. • There are discussions among monetary authority regarding the strengthening of regulation concerning financial products. However, NUBE still has to be given copies if there are formal guidelines on this