The Securities and Exchange Commission will revoke the licenses of lending and financing companies, which continue to fail to register and disclose their online lending platforms (OLP).
The Commission issued the stern warning, in a notice dated June 22, as it continues to cleanse the roster of lending and financing companies with potentially abusive operators of OLPs catering to Filipino borrowers.
In 2019, all lending and financing companies were required to report their OLPs to the Commission and register them as business names under SEC Memorandum Circular No. 19, series of 2019.
The Commission further directed lending and financing companies to display on their advertisements and OLPs their corporate names, SEC registration numbers and certificate of authority numbers.
The memorandum circular reiterated the requirement for lending and financing companies to disclose to their borrowers the interest rates and all other imposable charges before the consummation of loan transactions, as mandated by Republic Act No. 3765, or the Truth in Lending Act.
In their advertisements and OLPs, lending and financing companies must include an advisory for prospective borrowers to study the terms and conditions laid down in the disclosure statement required by the Truth in Lending Act before proceeding with the loan transaction.
The Commission mandated lending and financing companies operating online to report their OLPs through an affidavit listing all their OLPs which have already been existing prior to the issuance of SEC Memorandum Circular No. 19, series of 2019, and showing their compliance with the disclosure requirements within 10 days from effectivity of the memorandum circular.
Meanwhile, lending and financing companies must report new OLPs not later than 10 days before the commencement of the operations of the OLPs.
The registration and disclosure requirements allow for closer monitoring of lending and financing activities online and provide additional protection for borrowers from predatory lending.
Eighty-six lending and financing companies have registered their online lending platforms with the SEC as of April 7, 2021.
So far, the Commission has penalized several companies for the late filing of reports required under SEC Memorandum Circular 19, series of 2019, while show-cause letters have been issued against 33 lending and financing companies for operating unregistered OLPs.
The Commission may impose a fine of up to P1 million to lending and financing companies that continuously fail to comply with SEC MC 19.
Noncompliance may also lead to their suspension for 60 days, or the revocation of their certificates of authority.
The SEC continues to monitor lending and financing companies for their compliance with applicable laws, rules, and regulations.
To date, the SEC has revoked the primary registration of 2,081 lending companies for their failure to secure the requisite certificate of authority, pursuant to RA 9474, or the Lending Company Regulation Act of 2007.
The Commission also ordered four online lending applications to cease operations for lack of authority to operate as a lending or financing company last year.
The online lending operators were likewise found to have employed abusive collection practices.
Meanwhile, the Commission has revoked the certificates of authority of 35 financing/lending companies for various violations of SEC rules and regulations.*PR