Pre-need firms wouldn’t mind a bailout
abs-cbnNEWS.com | 01/24/2009 10:32 PM
The Philippine Federation of Pre-Need Companies said Saturday it would not say no to a bailout package from the government amid worries that the pre-need industry might face a big crisis.
The Federation sounded off an SOS to the government through the Securities and Exchange Commission (SEC) last August 2008 due to an erosion in trust funds caused by the volatility in the investment market.
Confidential documents showing an industry wide deficit of almost P47 bIllion were also obtained by ABS-CBN News.
Because of this, some lawmakers were proposing a bailout plan for the industry.
Federation President Miguel Vasquez clarified though, they did not ask for a bailout package, saying that in their letter last August, they only asked for a reform in regulations that would give them more time to beef up their capital.
This proposal is still being reviewed by the SEC until now.
The SEC, meanwhile, admitted they have been receiving deficit reports from pre-need companies, but they do not agree with the industry deficit figure of P47 billion.
The Parents Enabling Parents (PEP) Coalition believes that the pre-need companies and the SEC were not being transparent to the public.
It also slammed the SEC for its “inefficiency” in regulating pre-need companies.
It said none of the pre-need companies under rehabilitation, such as College Assurance Plans (CAP) and Pacific Plans, has been punished for mismanaging their trust funds.
The SEC explained though that it has limited powers, and thus, is also pushing for revisions in the Pre-Need Code that would give it more teeth in implementing regulations.
The federation, on the other hand, admitted that some pre-need companies did make bad decisions that led to the current situation of the industry.
One bad decision was the issuance of open-ended educational plans by both CAP and Pacific Plans, where they ended up paying school fees that were higher than the amount paid by planholders.
Some business organizations like the Makati Business Club are against the proposed bailout of the pre-need industry.
They said the government should not save an industry that failed due to bad decisions.
Otherwise, they added, all enterprises that collapse because of irresponsibility and wrong decisions would seek bailouts in the future. Zen Hernandez, ABS-CBN News
as of 01/26/2009 12:26 PM
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