As part of IPA’s Consumer Protection Research Initiative and in partnership with the Bangko Sentral ng Pilipinas (BSP, the central bank of the Philippines), IPA researchers are conducting a pilot study to increase BSP’s efficiency in monitoring financial service providers’ compliance with transparency and disclosure requirements.

The Challenge

As digital financial services expand globally, ensuring transparent pricing and clear disclosure of terms and conditions has become a critical consumer protection priority for financial regulators and an avenue for increased financial inclusion.¹ In the Philippines, the Central Bank (BSP) has introduced regulations on consumer protection standards, most notably Circular 1160, which includes requirements for financial service providers to clearly disclose fees, interest rates, and terms associated with financial products.

However, these disclosure requirements designed to increase transparency can be ineffective if consumers struggle to process the information or if providers respond by moving costs to fee categories with weaker disclosure rules.² Moreover, the level of compliance among providers is not well-documented. Traditional monitoring approaches are resource-intensive and difficult to scale. This creates a need for innovative, low-cost methods to help regulators efficiently assess compliance with transparency and disclosure standards across the market.

The Research

IPA researchers are working with BSP to increase their efficiency in monitoring financial service providers’ compliance with transparency and disclosure requirements. In particular, they will focus on payment and credit products from banks and mobile wallet providers with large customer bases that are considered priority entities for consumer protection monitoring.

1. Researchers will construct relevant indicators that assess the compliance of different financial institutions with the transparency and disclosure standards and regulations set by BSP. An assessment framework will aggregate individual indicators to higher level transparency scores. The aim is for the framework to be replicable in other countries aside from the Philippines.
2. This assessment framework will then be piloted using the websites, advertisements, and terms and conditions documents of a sample of financial institutions across the Philippines.

After piloting the transparency assessment tool, researchers will explore two extensions. First, they will test whether AI models can reliably automate compliance scoring by comparing AI-generated assessments with human-coded results. Second, they will expose actual consumers to real product advertisements and disclosures and test their comprehension of key features. By linking transparency compliance scores to actual consumer understanding, the researchers can identify which aspects of disclosure matter most for helping users grasp costs and risks.

Results

Results will be available in 2026.

Sources

1. Garz, Seth, Xavier Giné, Dean Karlan, Rafe Mazer, Caitlin Sanford, and Jonathan Zinman. "Consumer protection for financial inclusion in low-and middle-income countries: Bridging regulator and academic perspectives." Annual Review of Financial Economics 13, no. 1 (2021): 219-246.

2. Seira, Enrique, Alan Elizondo, and Eduardo Laguna-Müggenburg. "Are information disclosures effective? Evidence from the credit card market." American Economic Journal: Economic Policy 9, no. 1 (2017): 277-307.

Duarte, Fabian, and Justine S. Hastings. Fettered consumers and sophisticated firms: evidence from Mexico's privatized social security market. No. w18582. National Bureau of Economic Research, 2012.

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