With more than half of Filipino borrowers turning to informal lenders, authorities crack down on predatory practices while industry players take major steps to educate and protect borrowers. 

The current administration is taking a holistic approach to consumer protection in digital markets by conducting concerted efforts involving different government agencies and by calling on the financial technology (FinTech) sector to uphold industry standards on digital markets. 

The Department of Finance has recently called on FinTech companies to work together to protect consumer confidence in the digital markets. Meanwhile, the Securities and Exchange Commission (SEC) has intensified its campaign against unauthorized lenders with a series of orders, raids, and arrests over the last three months. It is targeting both unregistered lenders and registered lenders who are engaged in abusive debt collection activities which range from unauthorized access to debtors’ phone directories to offline contact with threats of physical harm. The SEC’s campaign to enforce the Financial Products and Services Consumer Protection Act and other applicable laws has been ably facilitated by the Philippine National Police Anti-Cybercrime Group and the Department of Justice.

In lockstep with the SEC, lawmakers have pushed hard to protect consumers from predatory lending practices that exploit gaps in financial literacy. Both Senator Joel Villanueva and Senator Sherwin Gatchalian have called for legislative inquiries into unauthorized lenders who threaten and harass customers. These calls have amplified Senator Raffy Tulfo’s criticism of lenders using elderly consumers’ payroll or pension Automatic Teller Machine (ATM) cards as collateral. 

The public sector’s renewed enforcement actions against unauthorized lenders show a concerted, collaborative commitment to protecting consumers. Responsible financing and lending companies, including global FinTech company Tala, strongly support and share this commitment to prevent unauthorized lenders from reaching and taking advantage of Filipinos. 

“Tala commits to treating debtors fairly and humanely. We stand with the Government in its efforts to enforce regulations that protect borrowers who are underestimated,” said Tala’s Senior Director for Global Customer Experience Operations Iona Iñigo-Mayo. “We also stand with the digital lending platforms that educate customers on borrowing responsibly and how to protect themselves from fraud.”

Within Tala’s digital lending platform and social media network, it encourages Filipinos to transact only with verified financing and lending companies and to report abusive debt collectors and unregistered lenders. It also has a robust library of financial literacy content in its app such as tips on borrowing responsibly. Tala upholds data privacy laws and consumer protection laws, resulting in a 94% trust rating in the Philippines based on its third-party 2022 impact report.   

Iñigo-Mayo continued, “At Tala, we work hard to build relationships of trust with our borrowers. They trust us to protect their personal information. They trust us to understand that life can be unpredictable and that payments can be past due sometimes. We would not betray that trust by selling their personal information or using unfair collection practices. Like Tala, every responsible and legal lender surely welcomes the crackdown of illegal lenders harming our borrowers.”  

The public and private sectors' actions against predatory lending practices and the push towards responsible lending will lead to positive developments for borrowers in the Philippines. Borrowers should have more legitimate and safer options when it comes to getting credit, so they are less likely to be trapped and pressured by unscrupulous lenders.

For questions about legitimate digital lending platforms, email at [email protected] or interact through the official Tala app.