PRESIDENT Gloria Macapagal-Arroyo has transferred supervision of the Securities and Exchange Commission (SEC) to the Department of Trade and Industry (DTI) from the Department of Finance.
The move, Executive Secretary Eduardo R. Ermita said, can be traced to concerns involving the pre-need industry, which is currently under the ambit of the corporate regulator.
"The pre-need (issue) is among those problems that came up and it is being investigated by SEC ... that being the subject matter being more or less within the purview of the functions of the DTI at this particular moment, the President thought it would be good to transfer supervision to the DTI," he said.
It is not the first time that the SEC has been placed under the Trade department. The corporate regulator's chief, Fe B. Barin, said Malacañang's decision was "not without precedent."
Trade and Finance department officials were not immediately available for comment. SEC Secretary Gerard M. Lukban, in a telephone interview, said the agency had yet to coordinate with the DTI on how the transfer would be effected.
The SEC recently came under fire for its supposedly lax supervision of the pre-need sector, spurred primarily by the closure of the Legacy Group of financial and pre-need companies earlier this year. Blame was also assigned to the agency when the pre-need industry warned that it was suffering a cash crunch due to the global downturn.
The criticism has led to legislative proposals that its power over the industry be handed over to the Insurance Commission.
Executive Order 800, signed by the President early this month, described the DTI as the "primary coordinative, promotive, facilitative, and regulatory arm of the Executive branch of government in the area of trade, industry and investment."
"In order to facilitate coordination of policies and programs in the field of trade, industry, and investment, it is necessary and practical to transfer the administrative supervision over the (SEC) from the Department of Finance to the DTI," the order states.
The local pre-need sector is no stranger to controversy: thousands of planholders lost their money in the wake of the College Assurance Plans collapse, which was soon followed by the Pacific Plans debacle, all of which occurred in 2004 and 2005.
The controversy was traced to so-called "open-ended" plans promised by the firms, which were scuppered when the government lifted controls on tuition fee increases.
The issue of inadequately funded operations — which the industry claims is due to the current global downturn — led to Permanent Plans, Inc. and Prudentialife Plans, Inc. losing their licences last month.
The SEC, which had given pre-need firms until April 15 to submit their yearly financial reports with an option to include a capital and trust fund buildup plan, has since declared the rest to be financially stable and capable of delivering on their obligations to planholders.
"Industry players, backed by P62 billion in trust funds, are ready to service their about 1.5 million plan holders, especially educational plan holders, in time for the opening of the coming school year," it said.
The pre-need industry is said to have incurred a P46.83-billion trust fund deficiency at the end of June 2008 due to shrinking returns. The figure was expected to have worsened at the end of last year.
Sales of pre-need plans continued to fall in 2008 for the third straight year, to P15.31 billion from P18.87 billion in 2007. Education plans took a significant beating, dwindling by over half to P1.73 billion from P3.85 billion in the previous year.
Initial collections, or the first payments made by plan holders upon purchase of a plan, slipped by almost a quarter to P1.51 billion from P2.01 billion in 2007. — from a report by Bernardette S. Sto. Domingo, with Don Gil K. Carreon
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