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SENATORS, voting to approve key amendments to the
Preneed Code on second reading, agreed to impose
additional restrictions on how pre-need funds can be
invested in a bid to strengthen protection for
planholders and make the industry more viable.
In
marathon floor debates on Wednesday, Sen. Edgardo Angara,
banks committee chairman and principal sponsor of the
new Preneed Code, accepted amendments proposed by Senate
Minority Leader Aquilino Pimentel Jr., in which
planholders may institute necessary legal action in
court to recover their investments in preneed companies,
in case of insolvency or bankruptcy.
The
Pimentel amendment added that “in case the insolvency or
bankruptcy is a mere cover-up for fraud or illegality, a
planholder may institute the legal action directly
against the officers and/or controlling owners of the
said preneed company.”
Another
amendment recommended by Sen. Mar Roxas II would also
prevent directors and officers of preneed companies from
having any investments in excess of P5 million in any
corporation or business undertaking in which a trust
fund is placed.
The
proposal was triggered by the collapse of preneed firms
like College Assurance Plan (CAP) and Pacific Plans in
which planholders failed to recoup millions of pesos in
combined contributions intended for their children’s
education.
“We have
learned from the past that a preneed company can go
bankrupt while its management holds on to billions worth
stored in a sister company,” Roxas explained in
justifying his amendment to the Angara committee’s
version of the bill. “Our laws have to adjust
accordingly to eliminate such devious practices.”
Roxas
recalled that the Securities and Exchange Commission,
even before, already required a certain amount of
planholders’ money to be placed in a trust fund.
“However, these payments to the fund were too small and
poorly timed, unable to meet financial obligations of
planholders.”
The SEC,
he added, “did not stop all these financial debacles
from happening where parents could not be paid and
promised funds could not be redeemed.”
In
pushing for the approval of the measure before Congress
adjourns next week, senators agreed on the need to
provide adequate protection and security to preneed
planholders by way of a restructured trust-fund
mechanism.
Roxas
added that the proposed Preneed Code would also subject
preneed firms to stricter disclosure requirements,
including information on the risks involved in buying
preneed plans. |
