The Securities and Exchange Commission (SEC) threatens to revoke the licenses of lending and financing companies that have yet to register and disclose their online lending platforms (OLP).
The Commission issued the stern warning in a notice 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 respective corporate names, SEC Registration Numbers and Certificate of Authority Numbers.
The memorandum circular also 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 said OLPs.
The registration and disclosure requirements allow for a closer monitoring of lending and financing activities online and provide additional protection for borrowers from predatory lending.
A total of 86 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 SEC may impose a fine of up to P1 million to lending and financing companies which continuously fail to comply with SEC Memorandum Circular No. 19, Series of 2019. Noncompliance may also lead to their suspension for 60 days, or the revocation of their certificates of authority.