RA 11765 and abusive collection practices

Republic Act No. 11765 is titled “An Act Affording More Protection to Consumers of Financial Products and Services,” with the short title Financial Products and Services Consumer Protection Act given in Section 1. It was approved on 6 May 2022, originating as Senate Bill 2488 and House Bill 6768.

It is a framework statute rather than a conduct code. Its function is to give four regulators, the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, the Insurance Commission, and the Cooperative Development Authority, a common set of powers over the financial service providers each supervises. Section 6 grants rulemaking authority, including the power to determine whether interest and fees are reasonable, along with market conduct surveillance and examination, market monitoring, enforcement, adjudication with subpoena and contempt powers, and the power to order restitution. Section 20 repeals Articles 131 to 147 of RA 7394, the Consumer Act.

Section 2 declares the rights the statute is built to protect:

• Equitable and fair treatment.
• Disclosure and transparency of financial products and services.
• Protection of consumer assets against fraud and misuse.
• Data privacy and protection.
• Timely handling and redress of complaints.

The entirety of what RA 11765 says about debt collection is Section 8(d): financial service providers are prohibited from employing abusive collection or debt recovery practices against their financial consumers. One sentence, one standard, no list.

For BSP-supervised institutions, BSP Circular No. 1160, series of 2022, approved by Monetary Board Resolution No. 1683 dated 17 November 2022, supplies the implementing rules. Its collection provision tracks the statute and adds two things worth knowing: collection agents must observe good faith and reasonable conduct and refrain from unscrupulous or untoward acts, and external collection agencies are indispensable parties in complaints involving unfair collection practices. The other three regulators issued their own implementing rules for the providers they supervise.

A large share of the law-firm alerts, news summaries, and vendor explainers covering RA 11765 state that it enumerates acts amounting to harassment or false representation, or that it prohibits contacting a borrower’s employer, family, or references. It does not. Read Section 8(d) and there is no enumeration to find.

That enumeration exists, but in a different and earlier issuance: SEC Memorandum Circular No. 18, series of 2019, dated 23 August 2019, which addresses unfair debt collection practices by lending and financing companies and includes the prohibition on contacting persons other than the borrower. If you need the itemized list of prohibited collection conduct in the Philippines, that is the document to read, not RA 11765.

Section 8(e) requires financial service providers to respect the privacy of and protect the data of their clients, and directs the regulators to issue rules, in coordination with the National Privacy Commission, on disclosure to third parties. It gives clients the ability to review and correct their data, to refuse its sharing with third parties, and to request its removal.

Note what this does and does not cover. It is a general privacy and data-protection duty, and it does not address a lender reading a borrower’s phone contacts. There is nothing in RA 11765 about contact-list or phonebook access. The rules that bear on that live in the data-privacy regime and in SEC MC 18’s restriction on contacting third parties.

This is the provision that most changes how a lender should think about outsourced collection. Section 13 makes a financial service provider solidarily liable with its third-party agents, and the statute explicitly offers debt collection as an example of the kind of agent it means.

Handing collection to an external agency, or to a software vendor, does not move the exposure off the lender. BSP Circular 1160 reinforces the point from the procedural side by naming external collection agencies as indispensable parties in unfair-collection complaints. The practical consequence: whatever your collection channel does, you own it.

• Section 15: imprisonment of one to five years and or a fine of ₱50,000 to ₱2,000,000.
• Section 16: administrative sanctions, with investment-fraud fines of ₱50,000 to ₱10,000,000 per instance.
• Section 6 enforcement powers: restricting unreasonable interest and fees, disqualifying officers, cease-and-desist orders, suspension of operations, and restitution to consumers.
• Section 14: a five-year prescriptive period, subject to a ten-year outer limit.

RA 11765 does not mention automated agents, and it does not need to. Section 8(d) attaches its prohibition to the financial service provider rather than to a medium, and Section 13 makes the provider solidarily liable for the agents it engages. An AI voice or SMS agent is a means by which the provider collects, so the same standard and the same liability attach.

What follows is that an automated collection channel has to be auditable by design. If a regulator asks whether a given account was contacted abusively, the answer has to come from a record, not from a description of how the system is supposed to behave. That means per-interaction transcripts, timestamps, outcomes, and a retrievable history of every contact attempt on the account.

For the itemized conduct constraints an automated agent should enforce, time windows, identification, opt-out handling, and the prohibition on third-party contact, see the separate explainer on BSP Circular 1133 and the collection-conduct rules, which covers SEC MC 18 in that context.

Nova for Finance treats the conduct envelope as a design constraint rather than a configuration option. Every interaction an automated agent has with a borrower is recorded with a full transcript, a timestamp, and an outcome, and is retrievable per account, which is what makes a Section 8(d) question answerable from evidence. Opt-out and channel preferences are enforced in the call flow rather than left to an agent script, and the agent does not contact anyone outside the borrower’s verified contact details.

The Section 13 point is the one worth internalizing when choosing any collection technology: the liability stays with the lender. That is the reason the audit trail matters more than the automation itself.