Solon proposes US-like consumer financial protection bureau

A member of Congress has asked regulators to fully ascertain the possible impact of the P12-billion Aman Futures Group pyramiding scam in Mindanao on small financial institutions in that part of the country.

“We are not overly concerned about any potential effects the scam might have on formal financial institutions. Just the same, we are counting on regulators to be extra watchful,” said Rep. Arnel Ty, a member of the House committee on banks and financial intermediaries.

The National Bureau of Investigation’s Anti-Fraud Division has yet to establish whether those who pulled off the scam that blew up earlier this month channeled some of the funds to formal financial institutions.

However, based on initial evidence, investors drawn to the rip-off were issued post-dated bank checks to cover their supposed lucrative interest earnings and returns of principal. However, the checks started bouncing when the scam collapsed.

“We sympathize with the victims of the scam. No effort should be spared in bringing to justice those responsible for defrauding and destroying the lives of thousands of small investors,” said Ty, congressional representative of sales professionals grouped under the LPG Marketers’ Association (LPG-MA).

Ty also supported Interior and Local Government Secretary Mar Roxas’s investigation of allegations that a number of local governments may have irregularly invested some public funds in Aman Futures.

This developed as the Bangko Sentral ng Pilipinas (BSP) shuttered a five-unit rural bank in Mindanao, adding to the woes of small savers there.

Northern Mindanao’s Siam Bank (A Rural Bank) Inc., which last reported having 5,376 savers with P140.48 million in total deposits, was closed down by the BSP on Nov. 22.

Siam maintained a head office in Cagayan de Oro City and four branches  — one each in Iligan City, Lanao del Norte; Valencia City, Bukidnon; and in the municipalities of Lugait and Villanueva, both in Misamis Oriental.

The BSP also padlocked the Pasuquin, Ilocos Norte-based Ilocandia Community Bank Inc. the same day. The three-unit lender last reported having 1,533 savers with an aggregate of P39.44-million in deposits.

The two lenders brought to 19 the number of banks put under receivership this year due to severe liquidity issues and their inability to service withdrawals.

Meanwhile, Ty said Congress should consider creating a new financial consumer watchdog to help safeguard the public against future investment scams.

“We may have to put in place an entity patterned after the US Consumer Financial Protection Bureau, which the US established in 2010, in the aftermath of the US financial crisis, which also saw some of America’s biggest investment scams blowing up,” Ty said.

The US Congress established the bureau not only to fight home mortgage-related abuses that brought down the US housing market, but also to discourage scams similar to Bernard Lawrence “Bernie” Madoff’s $65-billion Ponzi scheme, considered the largest financial fraud in US history.

The bureau conducts rule-making, supervision, and enforcement for consumer financial protection laws; restricts unfair, deceptive, or abusive acts or practices; takes consumer complaints; promotes financial education; researches consumer behavior; monitors financial markets for new risks to consumers; and enforces laws that outlaw discrimination and other unfair treatment in consumer finance.

About accounting

You must be logged in to post a comment Login

Leave a Reply