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Philippine Fintech alliance to adopt TechnoEthics

Philippine regulators such as the Securities and Exchange Commission (SEC) and the National Privacy Commission (NPC) welcome the move of an organisation of Fintech and digital firms to institutionalise an industry-wide code of ethics and adopt a code of conduct.

According to a recent report, the regulators have committed to work closely with the private sector as well as other government agencies like the Bangko Sentral ng Pilipinas (BSP) and the Department of Trade and Industry (DTI) to promote the safety and security of consumers.

The Framework

TechnoEthics is a framework on the ethical utilisation of emerging technologies, which will protect the consumers against the misuse and abuse of innovations.

Moreover, it is an adoption of common principles to guide players about new advances in technological development and application to benefit society.

The initiative involves setting standards for the industry to promote transparency and protect customers from any possible malpractices and other unethical actions of FinTech players.

Under this framework, FinTech players would not be allowed to use customer data with the objective of disbursing more loans.

Additionally, the practice of intimidation by FinTech players in order to collect from borrowers is likewise prohibited.

Alliance members providing online lending would be required to fully disclose all costs of customers including interest rates, processing fees and fines for late payment.

Background of the Initiative

The move of the Alliance to adopt an initiative that will protect consumers from unscrupulous and abusive online lenders stemmed from the recommendation of the NPC to file criminal charges against officials of online lenders for data privacy violations.

The Alliance will create a code of ethics and adopt a code of conduct for responsible lending because the online lenders violated the Data Privacy Act for their business practice of shaming borrowers by targeting their privacy in order to collect payments.

Complaints received by the Commission included the following:

  1. Online lending firms used the contact list of borrowers without consent or authority
  2. Disclosure of unwarranted or false information to other persons
  3. Use of personal information for harassment
  4. Unduly intrusive personal data processing

In addition, the Alliance’s initiative also comes as the SEC issued a cease and desist order against online lending applications operated by unlicensed persons and entities, amid complaints of invasion of privacy and harassment.

SEC decided to conduct investigations on lending activities of the online apps as they received several complaints. These are:

  1. High interest rates
  2. Unreasonable terms and conditions
  3. Misrepresentations as to non-collection of charges and fees
  4. Violation of right to privacy
  5. Abusive practices
  6. Accessing the personal information of borrower to contact a borrower’s relatives, friends and acquaintances
  7. Threatening public shaming and harassment

The industry-wide code of ethics and code of conduct should reportedly help steer the financial technology industry toward higher standards of behaviour and away from attempts to exploit it for money laundering, terrorist financing, fraud and invasion of privacy.

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