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The new rule amendments allow trust corporations to offer their investment products through third-party distributors, including individual and institutional agents.
The BSP (Bangko Sentral ng Pilipinas) approved new guidelines that will allow trust companies to distribute unit investment trust funds (UITF) to investors through third-party channels.
Currently, trust corporations distribute UITF only through their main offices. The amendments to the rules state that they can offer their products through other channels, including individual and institutional agents, as long as external distributors meet strict qualification standards.
“This initiative supports the BSP’s advocacy to promote financial inclusion by expanding access points to innovative financial products and services,” the BSP said in a statement.
Individual agents and employees of institutional agents must meet the existing qualification requirements for UITF marketing staff, while institutional agents must be accredited and duly authorized by the corresponding regulatory agencies to distribute financial products.
“In accordance with the expectation that the board of directors and senior management maintain an effective and efficient internal control framework, the trust corporation will adopt appropriate control mechanisms to ensure the protection of clients’ funds,” says the BSP.
The ultimate responsibility for KYC still rests with the trust corporations, although both individual and institutional agents may perform client suitability assessments and the client identification and verification process on behalf of the trust corporation, subject to the rules of subcontracting as per existing AML / CFT regulations.
The amendments are based on governance mechanisms and due diligence requirements under the existing outsourcing framework for supervised institutions, says the BSP.
“Through this policy, agents are expected to bring products closer to investors,” said BSP Governor Benjamin Diokno. “At the same time, it is an opportunity for the industry to grow assets under management through partnerships with distributors. More products on the market will also bode well for the development of the capital market. “
The BSP circular on the amendments is available here.
The measure is part of the set of reforms that BSP is carrying out to promote the growth of the trust industry. The BSP also has plans to renew the regulatory framework for trusts, investment management and other trust accounts.
Additional reports from BusinessWorld.
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