Wake Up, Philippines!

4 pre-need firms near collapse

Posted in Financial Services, Pre-need Plans by Erineus on February 11, 2009

MANILA, Philippines–Four more pre-need firms are said to be on the verge of financial collapse, the head of a group of plan-holders said Tuesday.

One of them is Pryce Plans Inc., said Philip Piccio, president of the Parents-Enabling Parents Coalition (PEP).

Securities and Exchange Commission Chairperson Fe Barin refused to comment on Piccio’s information at the resumption of a Senate inquiry into troubled pre-need firms, but Jose Aquino, director of the SEC Nontraditional Securities and Instruments Department, confirmed it.

Pryce had declared funding problems in 2005 and has not been allowed by the SEC to sell new pre-need products. The SEC confirmed that the company was still in operation but only to service clients’ claims.

Piccio refused to name the three other troubled pre-need firms lest he be sued for libel, but he challenged the SEC to make the public disclosure to warn plan-holders and protect the public from buying plans from them.

“It is their duty to announce the situation of every company,” he said. “The problem here is it is the federation [of pre-need companies] that is announcing, not the regulator. That’s the problem. Let the regulators regulate, see the problem, not the federation. But the problem is the federation says ‘we’re OK.’”

Piccio said he got wind of the impending bankruptcy of the three unnamed pre-need firms from complaints of their plan-holders. He said the companies were still operating.

Barin said at the hearing: “If the question is about the pre-need companies that are about to collapse, no, we are not at liberty to say that. In the first place, we have to go back to our offices and take a look.”

Piccio criticized the SEC during a break at the three-hour hearing. “That’s the biggest question — why are they withholding the information?” he said.

He said the SEC did not want to disclose the information “because they don’t want to create panic. But if it will collapse, it will collapse.”

In December 2008, three pre-need firms affiliated with Legacy Group — Legacy Consolidated Plans Inc., Scholarship Plan Philippines Inc. and All Asia Plans Corp. — ceased operations without SEC approval.

A list obtained from the official SEC website showed 27 pre-need corporations with 2009 dealer’s license as of end-January. Last year, pre-need corporations sold more than 250,000 educational, life and pension plans totaling P15 billion.

Barin confirmed to the joint committee that Pryce was no longer selling plans. “If you don’t have a dealer’s license for this year, then you should not be selling,” she said.

Barin also confirmed that the SEC had received reports that Pryce was giving plan-holders cooking gas and medicines instead of cash to service claims, a scheme dubbed “exchange of benefits.” She said this was not illegal.

Piccio said people were going to the PEP for help. “We know what these companies are, and yet the [SEC] is not announcing it,” he said. With Inquirer Research; edited by INQUIRER.net

By Michael Lim Ubac
Philippine Daily Inquirer
First Posted 02:19:00 02/11/2009