Press Release
September 17, 2006

Akin to throwing good money after bad

Senator Mar Roxas cautioned the Securities and Exchange Commission (SEC) against renewing the license of the beleaguered College Assurance Plans, Inc. (CAP) to sell pre-need plans.

I would advise against any move to renew CAPs license without due consultation with thousands of victimized parents, whose high hopes of giving their children quality education had been thrown out of the window due to CAPs demise, he said.

Granting CAP a new license before it has fulfilled its obligations to existing plan holders could create even more problems for the company and its present and future clients, he added.

Roxas, who is chairman of both Senate committees on trade and economic affairs, said such an unsolicited suggestion should be carefully assessed by SEC, considering that the interest of plan holdersboth currently unserved planholders and prospective new onesis of paramount importance.

We dont want more parents and students to be subject to the same predicament, which was in part caused by the failure of SEC in the past to proactively regulate the industry and ensure consumer welfare, he said.

The senator explained that if CAP would again be allowed to sell pre-need plan products, it would be uncertain if the new plans sold will be subject to the same rules and regulations as those levied on plans sold before the 2004 suspension order. If the same regulations would be applied to the new plans, then the flaws and lapses of the past would just be repeated since findings of SEC investigations and other lessons learned will not be taken into account.

In past hearings of the Senate trade committee on beleaguered pre-need plans, SEC officials admitted that they only checked on a pre-need companys financial health after a planholder lodges a complaint with them.

Equally important, the senator stressed that SEC should not allow the collection of premium payments from new pre-need plans, for use to compensate unserved plan holders. He said this is tantamount to pardoning CAP for the mismanagement and misappropriation of its trust fund, and allowing them to repeat the same mistake, thus creating new victims.

If SEC allows CAP to sell pre-need plans again, it would be tantamount to abetting the throwing of good money after bad, Roxas said. He added it would also set a bad precedent, encouraging financially-troubled pre-need firms to do the same.

The senator issued his statement in reaction to news reports that Makati Regional Trial Court Branch 149 Judge Cesar Untalan asked the SEC to consider renewing the license of CAP, which has been suspended in 2004. The judge was quoted as suggesting that SEC gives CAP back its license under a controlled situation, so these plan holders will be served.

News Latest News Feed