MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4811.12.31Risk Disclosure Statement shall contain,among other things, the following provisions:(i.) Cautionary statement on the generalrisks of investing or associated with financialintruments, i.e., if the market is not good,an investor may not be able to get back hisprincipal or original investment. Suchstatement must be given due prominence,and not to be concealed or masked in anyway by the wording, design or format of theinformation provided;(ii.) If the investment outlet is exposedto any major or specific risks, a descriptionand explanation of such risks shall be clearlystated; and(iii.)Advisory statement that for complexinvestment products, said instruments canbe subject to sudden and sharp falls in valuesuch that the client may lose its/his entireinvestment, and, whenever applicable, beobligated to provide extra funding in case it/he is required to pay more later.Additional risk disclosures may beprovided as appropriate.The TE must ensure that the trust,fiduciary and investment managementagreements and documents have beenreviewed and found to be legally in order.B. Account administrationIt is the fundamental duty of a fiduciaryto administer an account solely in theinterest of clients. The duty of loyalty is aparamount importance and underlies theentire administration of trust, other fiduciaryand investment management accounts. Asuccessful administration will meet theneeds of both clients and beneficiaries in asafe and productive manner.Account administration basicallyinvolves three (3) processes, namely;(1) periodic review of existing accounts,(2) credit process and (3) investmentprocess.(1) Periodic review of existing accountsThe board of directors and TrustCommittee shall formulate and implementa policy to ensure that a comprehensivereview of trust, fiduciary and investmentmanagement accounts (including collectiveinvestment schemes such as UIT Funds) shallbe conducted. The periodic review ofmanaged accounts shall be aligned with theprovisions on the review and updating ofthe CSA and IPS. The board of directors maydelegate the conduct of account review tothe Trust Officer or Trust DepartmentCommittee created for that purpose. Thepolicy shall likewise indicate the scope ofthe account review depending upon thenature and types of trust, fiduciary andinvestment management accounts managed.A comprehensive accounts review,which shall entail an administrative as wellas investments review, shall be performedon a periodic basis to ascertain that theaccount is being managed in accordancewith the instrument creating the trust andother fiduciary relationship. Theadministrative review of an account istaken to determine whether the portfolio/assets are appropriate, individually andcollectively, for the account, while aninvestment review is used to analyze theinvestment performance of an account andreaffirm or modify the pertinent investmentpolicy statement, including asset allocationguidelines. Whether the administrativeand investment review are performedseparately or simultaneously, thereviewing authority shall be able todetermine if certain portfolio/assets are nolonger appropriate for the account, (i.e., notconsistent with the requirements of theclient) and to take proper action throughprudent investment practices to change thestructure or composition of the assets.The periodic review process alsoinvolves disclosure of information on theinvestment portfolio and the relevantinvesting activities. Regardless of the degreeof discretion granted by the client to the TE,the former assumes full risk on the investmentand related activities, and counterparties.Relevant changes in the TE’s organization orApp. Q-48 - Page 6Manual of Regulations for Non-Bank Financial Institutions