Press Release
February 10, 2009

Chiz chides BSP, SEC "pingpong" over pre-need woes;
Neglecting public interest

Senator Chiz Escudero today said the Bangko Sentral ng Pilipinas (BSP) and the Securities and Exchange Commission (SEC) ignored the first sign of smoke in the pre-need industry when problems were just starting to show.

In the Senate hearing today, Escudero chided the two agencies for ignoring the complaints which have ballooned into the scandalous mess the pre-need industry is facing today.

"As early as 2003 the first sign of smoke showed, there were already complaints of non-delivery of commitments to the plan holders, but BSP and SEC were too busy playing ping pong while the plan holders of the pre-need companies wail over the loss of their life savings," he said.

Escudero said even as the fire started raging, both agencies continued to point to one another as to who should put out the blaze instead of acting on it.

"There is a disconnect between BSP and SEC. Both are there to protect the interests of the plan holders and the depositors but at the end of this all, we see them doing otherwise," he told officials of BSP and SEC at the hearing on the problems confronting the industry.

He said that as early as 2004, the SEC and BSP should have already detected the questionable offerings of the Legacy Group of Companies.

"They themselves said that the interests were too high, and these showed signs of unsound and unfair banking practices, yet they did not do anything to stop it."

Escudero said BSP and SEC did not exercise its full supervisory function and power over illiquid banks and pre-need companies.

"They simply watched the pre-need bubble burst. How long does it take for them to see a problem? If they cannot even detect that a problem is brewing in their turf, then they have no business overseeing the banking industry," the senator said.

Escudero also slammed the BSP's policy on non-disclosure to the public about companies like Legacy, even though it knew that it was bound to collapse. The SEC also said it restrains itself from releasing delicate information because the ailing firm might still have a chance to recover.

"Such procedure works to the detriment of the people. What then can the public get from them for protection when problems arise in their banks or pre-need companies? These must be addressed by looking at how the current procedures are exercised by the concerned authorities which are SEC and BSP," Escudero said.

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