When banks, preneed firms fold
THE LOW-GRADE fear of bank and other corporate failures that spread slowly last year has turned to reality for many who have been victimized recently by the record closure of rural banks last year and worries that the preneed industry is on the brink of disaster.
The Bangko Sentral ng Pilipinas has said P21.6 billion worth of deposits are virtually frozen inside the 25 rural banks padlocked last year.
That’s a big amount of money at a time people are losing their jobs.
“There’s real fear among the people right now,” says Alvin Tabañag, a registered financial planner and author of “Kaya Mo Pinoy! 12 Steps To Build Wealth On Any Income.”
The timing couldn’t be tougher. If you’re fighting to keep your job or have already lost it, losing your savings is the equivalent of getting whacked in the head by someone you trust and being asked to pay for your hospital bill. These financial disasters rewrite for Filipinos what “safe” means.
Fortunately, all is not lost. When a bank is closed by the central bank, it is normally turned over to the Philippine Deposit Insurance Corp., which then examines the bank’s records to determine which deposits are insured. You can still get your money back—or at least some of it—if you know what to do.
Here’s a guide on how to get your life back after bank or preneed failures:
1. Bring proper identification. Both the PDIC and the Securities and Exchange Commission, the state regulator of preneed companies, say most delays are caused by lack of proper identification documents.
Some depositors bring ATM cards, credit cards, or membership cards in clubs to prove their identity. Cut the processing time by bringing any two of the following: Social Security System or Government Service Insurance System cards, Professional Regulation Commission license, driver’s license, senior citizen’s card, passport, company or school identification card, Taxpayer’s Identification Number card, a Philhealth card, and a voter’s identification card or affidavit.
If you are filing a claim on insured deposit in behalf of someone else, you need to bring the same documents, plus a special power of attorney (SPA). If the owner of the account is abroad, the Philippine consul where he lives must authenticate the SPA.
2. Bring evidence of your deposits or preneed policy. These include savings passbooks, certificates of time deposit, ATM cards, unused checks and bank statement, and other relevant documents. The PDIC will be double-checking the consistency of your signatures.
When claiming against preneed companies, bring a copy of the plan contract, the certificate of full payment, or official receipts of your payments so far, if the plan is not yet fully paid. In the case of plan holders of Legacy Consolidated Plans Inc., Scholarship Plan Phils. Inc., and All Asia Plans Corp., which have recently closed, you need to file a sworn complaint on or before March 31.
Sources who asked not to be identified say many of the documents issued by these firms did not have signatures and appear to be spurious. Take a look at your documents and show them to a lawyer who specializes in financial transactions, if you think their legitimacy will be questioned.
“Asking is actually free compared with the money you stand to lose,” says Atty. Carlo Cariño, senior partner at the Cariño and Mabalot Law Offices. You also need to provide the SEC with your complete and updated mailing address and contact numbers. Go to the Non-traditional Securities and Instruments Department of the SEC. In the Ortigas head office, their landline is 584-6058 and the department head is Jose Aquino.
3. Continue paying your loan when PDIC sends you a letter of collection. You are not off the hook even if the bank you borrowed from closes. You may be slapped fees and finance charges if you don’t maintain your good credit standing even in a closed bank.
4. Collect issued post-dated checks and assume automatic debt arrangements are out. These checks are no longer valid, so replace them or arrange to pay some other way.
5. Fill up three copies of a claim form from the PDIC and sign the “Signature of Depositor/Claimant over Printed Name” under the “To be accomplished by the Depositor/Claimant” portion in the claim form. Again, what the PDIC will be putting under the microscope is the integrity of the signature, making sure none are forged.
6. If you are filing in person, go to either the branch of the closed bank where you deposited your money or another site designated by the PDIC, or the PDIC claims counter located at PDIC Ayala Extension office, SSS Building, corner V.A. Rufino Street, (formerly Herrera Street), Makati City.
7. You can also process your claim via mail through this address:
The Assistant Vice President,
Claims Processing Deparment
Philippine Deposit Insurance Corp.
2228 Chino Roces Avenue
1231 Makati City, Philippines
Some depositors get their insured deposits within an hour if the documents are pristine and the account is “clean.” That means any loans payable to the bank and taxes that need to be paid have already been deducted, and interests earned were already added.
A “clean” account also means there are no questions about the legitimacy of the deposit. It is not unheard of for bank employees to be in collusion with depositors in “splitting” accounts when they realize the bank is about to be closed. This hurts bona fide depositors because the presence of split and fictitious accounts makes everyone jump through hoops to get their money.
Auramar Calbario, head of corporate communications at the PDIC, says claimants are normally classified into three: “clean,” “document-deficient” and “for further verification.” Only claimants with clean documentation will be paid within an hour or at least the same day.
If you belong to the second category, you may be asked to present more documents to prove you are the real owner of the account. If you belong to the third, claim agents will interview you and this is where the actual depositor needs to appear personally.
A depositor’s relationship with a bank can get complicated. Aside from the usual savings, checking, and time deposit accounts, now there are unit investment trust funds and investment accounts. There are joint accounts, accounts held in trust, institutional accounts and joint accounts. Which of these are safe? And what if your account exceeds the insured amount of P250,000?
Depositors sometimes commit the common mistake of opening accounts in different branches in the same bank, perhaps one as a time deposit, one as a checking account, and another as a savings account, and expecting that each would be insured up to P250,000. This is a grave mistake because the PDIC will add up all your single accounts in a particular bank and apply the P250,000 limit to the total.
But if one of your accounts is a single depositor account, and another is a joint account with your husband, for example, your deposit will be insured separately from the joint account. The PDIC website shows exactly how this is computed. Unit Investment Trust Funds and investment accounts are not insured by the PDIC.
If your deposits exceed P250,000, you may still claim for the excess but you have to wait until the PDIC has filed with the liquidation court, has already disposed of the bank’s assets, is ready to distribute these assets, and there is enough to go around starting with preferred creditors like the government to ordinary depositors—yes, that’s you.
In the case of the Rural Bank of Parañaque and other banks under the bankrupt Legacy group that were recently closed, the verification of documents and claim time is much longer. PDIC has started payouts for small depositors first (those who have P120,000 and below) last Dec. 22. Those who have more than that will have to wait until mid-February. Claim forms are not yet available, as of this writing. Go to the PDIC website, one of the most helpful government websites, on how to follow up your requests.
Tabañag says too many Filipino savers are still lured by easy money, which is why many are caught by bank failures and scams with their pants down. “Typical Pinoy. We want high returns quickly. We just want to sit back and wait. We find that it’s easy at first, but enjoy the rewards only for a short time,” he says.
The Legacy case is another big Ponzi scheme, he says. “Banks don’t have agents. The reason why Legacy’s agents were very confident especially in converting preneed plans into time deposits is they are expecting the PDIC to bail them out. Their practices were really not sound,” he adds.
Tabañag advised depositors and plan holders of Legacy to file a class suit against the company. Cariño says that “the more the voices, the more pressure” plan holders can exert on government and the owner. If the plan holders win their case, the owners may be personally liable to the people they defrauded.
Tabañag, a personal money management coach, also said that apart from waiting and praying, it is crucial now for depositors and plan holders to start rebuilding their educational and retirement plans and investing again—this time, in a smarter way.
“There is no other way but to start to save more again. You can do this by increasing your income, spending less or doing both. There are many ways Filipinos can do this,” Tabañag says.
“Forget the LV (Louis Vuitton) bags for the moment. You can go for UCB in the meantime. That means United Colors of Baclaran,” he says.
(For more personal finance articles, visit MoneySmarts at http://blogs.inquirer.net/moneysmarts.)