The nation's lenders will be banned from airing their television, movie and radio advertisements for cash-advance cards, as the financial regulator decides to use stricter regulations to govern the popular consumer banking product.
Taking effect on May 1, the new rules will also prohibit the cash-card advertisements to be shown on outdoor billboards, the Financial Supervisory Commission said. In addition, any applicant who already owns five cash cards will be required to present salary or financial statements when applying for an additional one.
The commission came up with the new rules with the Bankers Association (
A Consumers' Foundation (
"This is belated justice as the cash-card business has already created negative effects, especially on young people, for years," said Terry Huang (
"But the rules saying cardholders with more than five cash cards or a total credit line exceeding NT$1 million will be supervised still fall short of our expectations. Every card application should be carefully monitored," Huang added.
Cash cards, which first appeared in the Taiwan market after Cosmos Bank Taiwan (
The three largest cash-card issuing banks control more than 50 percent of the market: Cosmos Bank, Taishin International Bank (台新銀行) and Chinatrust Commercial Bank (中國信託).
The eligibility requirements for cash cards are significantly lower than those for other types of consumer debt including credit cards, with some banks even issuing cards to prospective applicants with no steady income. Consequently, the abuse of cash cards by young users has forced the financial regulator to demand local lenders equip themselves with sophisticated monitoring and collection systems, as well as comprehensive credit policies to control credit risk.
A Taishin public-relations official said the new restrictions on cash card advertisements will not create a marked impact on business because other marketing methods are still available, such as ads in newspapers, magazines and on the Internet.
"Our investment in TV commercials does not constitute a major proportion of this. However, we think these regulations might deal a big blow to the largest issuer, Cosmos Bank, or the small competitors who rely much on TV commercials for image publicity," the official said.
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