SEC steps up campaign vs illegal online lenders

The Securities and Exchange Commission (SEC) has issued a fresh warning against lending and financing companies that fail to register and disclose their online lending platforms (OLPs).

As it continues to weed out abusive OLP operators, the SEC said in an advisory dated June 22 that it would revoke the licenses of all noncompliant entities.

In 2019, the SEC required all lending and financing companies to report their OLPs and register their business names. They were also directed to display on their advertisements and OLPs their respective corporate names, SEC registration numbers and certificate of authority numbers.

Lending and financing companies were also required to disclose to their borrowers the interest rates and all other charges before the consummation of loan transactions, as mandated by the Truth in Lending Act or Republic Act No. 3765.

Under this law, lending and financing companies must include in their advertisements and OLPs an advisory for prospective borrowers to study the terms and conditions laid down in the disclosure statement before proceeding with the loan transaction.

These entities are required to submit an affidavit listing all their OLPs which have been existing prior to the issuance of SEC Memorandum Circular No. 19, Series of 2019, which required the registration and reporting of these platforms.

They also have to report new OLPs not later than 10 days before starting to operate new platforms.

“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,” the SEC said.

A total of 86 lending and financing companies have registered their online lending platforms with the SEC as of April 7, 2021. The list of authorized lenders is posted on the SEC’s website.

So far, the SEC has penalized several companies for the late filing of reports, while show cause letters have been issued to 33 lending and financing companies for operating unregistered OLPs.

The SEC may impose a fine of up to P1 million on lending and financing companies that continuously fail to comply with SEC Memorandum Circular No. 19. Noncompliance may also lead to their suspension for 60 days, or the revocation of their certificates of authority.

To date, the corporate watchdog has revoked the primary registration of a total of 2,081 lending companies for their failure to secure the requisite certificate of authority, pursuant to the Lending Company Regulation Act of 2007.