Govt, fintech stakeholders to establish industry code

Private and government entities will establish an industry standard on consumer governance, compliance, data privacy, and consumer protection.

The government and financial technology industry stakeholders have agreed to institutionalize an industry-wide code that would encourage responsible online lending.

At a news briefing on Monday, the members of FinTech Alliance Philippines, an organization of financial technology (fintech) and digital firms, said it is in collaboration with the National Privacy Commission (NPC), the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC) and the Department of Trade and Industry (DTI).

Both private and government entities will establish an industry standard on consumer protection, governance, compliance, data privacy, security and digital literacy.

“This initiative would protect the good actors or players in the industry and to promote those who would protect the consumers from any possible malpractices and other unethical actions by any fintech players,” FinTech Alliance chairman Lito Villanueva told reporters.

Villanueva said they have formed a framework dubbed, “TechnoEthics,” which will outline the ethical utilization of emerging technologies and form the guidelines for consumer protection against the misuse and abuse of innovations, and adopt common principles to guide players on advances in technological development.

Under this framework, fintech players would be prohibited from manipulating customer data to disburse more loans by requiring lenders to fully disclose all costs for customers including interest rates, processing fees and fines for late payment.

Villanueva explained it would set industry standards in promoting transparency and protect consumers from possible malpractices and other unethical acts made by fintech players.

He added the concept of establishing the guidelines came about after three online lenders were cited by the NPC for privacy violations.

Certain lenders have resorted to “public shaming” borrowers who failed to remit their monthly loan amortization by contacting third-parties without their consent or authority.

Meanwhile, Villanueva said the usual victims of these schemes are socially-disadvantaged members of the society who, ironically enough, also make up the bulk of the intended beneficiaries of the financial inclusion programs.