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Manila Bulletin devider Business devider Banking & Finance devider Loan cost caps ahead: Recto orders SEC to tighten rules slapped on lenders

Loan cost caps ahead: Recto orders SEC to tighten rules slapped on lenders

Noncompliant lenders could face suspension

Published Nov 5, 2025 10:34 am

At A Glance

  • Exploitative lending and financing firms could soon lose their grip on desperate borrowers as the Securities and Exchange Commission (SEC) has moved to finalize the caps on borrowing rates and other fees, after President Marcos' chief economic manager ordered them to raise their guards.
Exploitative lending and financing firms could soon lose their grip on desperate borrowers as the Securities and Exchange Commission (SEC) moves to finalize caps on borrowing rates and other fees, after President Ferdinand R. Marcos Jr.’s chief economic manager ordered tighter oversight.
In a Nov. 5 statement, Department of Finance (DOF) Secretary Ralph G. Recto urged stricter consumer protection, pointing out that lending sharks are all over the online space, victimizing Filipinos with exceedingly high borrowing costs and dragging them into a debt trap.
According to the DOF, the SEC, under its supervision, is now wrapping up a memorandum circular (MC) that “will set caps on interest rates and other fees imposed by lending and financing firms.”
Under the proposed rules, the SEC seeks to set a limit on interest rates and other fees applied to unsecured general-purpose loans with a maximum amount of ₱2,000 and six-month loan terms.
The SEC is proposing a nominal interest rate, which excludes compounding costs, of six percent per month or around 0.2 percent per day. The effective interest rate—including all other costs and fees—is expected to be capped at 10 percent per month or about 0.33 percent per day.
“Late payment or nonpayment penalties would be limited to five percent per month on the outstanding amount,” the DOF said, noting that the SEC also wants to impose a ceiling on the total charges applied to the loan amount.
Sanctions also await noncompliant lending companies. Those who fail to observe the interest rate caps would face a fine of up to ₱100,000 for the first and second offenses.
“Heavier penalties, including suspension and revocation of permits, may also be slapped on noncompliant companies,” the DOF said.
To further refine the proposed rule, feedback and input from the public are expected until Nov. 14.
SEC Chair Francis Lim said the Commission will ensure that lending practices “remain fair, transparent, and aligned with consumer protection standards, while promoting the continued viability and competitiveness of legitimate financing and lending companies.”
Based on the Financial Products and Services Consumer Protection Act, the SEC has the authority to determine “reasonable interest rates and fees that financial service providers may demand, collect, or receive for any service or product offered to consumers.”
Recto also vowed to support the SEC in strengthening its regulation of financing companies.
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