PRESIDENT Ferdinand E. Marcos Jr. has said he would take action to improve consumer protection. In particular, I believe, that more needs to be done in the banking sector.
Over the past few years, there has been a rapid increase in bad experiences suffered by banks’ customers. This culminated last December when over 700 customers found that their accounts with BDO had been hacked. Eventually, it was reported that these customers received refunds.
I hope banks do not believe that refunds are sufficient redress for customers whose accounts have been compromised. Unfortunately, those who have suffered may never feel the same way about banking again.
I am one of those customers.
My first encounter with a bank was in 1961 when I opened an account. This was an unqualified success. For a long time, I had a small, routine relationship with my bank. Gradually, I expanded the scope of my account. In particular, in 1968, I purchased an insurance policy. This operated by a monthly subscription. I paid this by direct debit, an early example of electronic banking. There were those who were nervous about the safety of electronic banking but for 40 years the system credited my insurance premium to the insurance company without an adverse incident.
Since there are those who believe that using electronic banking is a risk we have to take, I have to disagree. Electronic banking can and should be safe. Nevertheless, there are an increasing number of problems. This is because, in my opinion, banks are currently losing the perennial battle with the bad guys.
In 1977 I worked for The Royal Bank of Scotland (RBS). We were the first bank in the world to operate a 24/7 on-line ATM service. We had taken necessary precautions and never experienced a hacking incident.
I believe that many electronic banking systems nowadays lack the necessary ability to ensure that customers are not cheated.
My first adverse experience occurred in 2007 when my BDO account was hacked. This may have been an early example of the same problem that occurred in 2021.
I was concerned that BDO’s senior management had no more understanding about how my account could be hacked than I did. Nevertheless, the bank’s senior manager for retail banking talked knowingly about ‘firewalls’ when demonstrably firewalls did not exist.
BDO refunded the money I had lost but I have never felt the same way again.
My concern about consumer protection is that banks persist in controlling the narrative. The televised Senate Inquiry into the RCBC/Bangladesh Bank problem in 2016 was a good example.
In order to have adequate consumer protection, we must have more knowledgeable people who do not allow banks to dominate, even when it is irrefutable that something has gone wrong.
We need a consumer protection agency which is empowered to obtain a necessary ascendancy over banks which currently are not receiving sufficient discipline, with internally or by external agencies such as Bangko Sentral ng Pilipinas (BSP).
If the consumer protection function for the banking sector is to remain in BSP, then BSP needs more teeth.
Otherwise, we need an independent agency which is able to dominate those banks which currently do not provide adequate protection against hackers./PN
