Industry players vow to improve debt collection practices

Industry players vowed to improve their debt collection practices in compliance with the new regulation of the Securities and Exchange Commission (SEC).

The Philippine Finance Association (PFA), an organization of lending and credit companies, said it is supporting the new SEC circular which tightens rules on credit collection.

According to SEC Memorandum Circular No. 18, lending companies cannot use offensive and threatening language to collect debt payments. It also limited the hours for collection of these payments.

In all, the SEC put stricter control and regulation on the lending and finance businesses in the country. The circular covers the third party service providers tapped by these companies.

In support of the new SEC regulation, the PFA is raising awareness on proper collection practices.

“More than just for the sake of complying, these new regulations can also improve the overall landscape of our business. As industry players, it is our responsibility to build a good reputation for a growing industry like ours,” said PFA president Jude Romano, who is also the head of external affairs of Home Credit Philippines, a leading provider of instalment loans and other products like cash loans to regular consumers.

The SEC passed the circular amid numerous complaints from customers who have experienced being harassed by debt collectors.

The memorandum aims to pose better regulation, especially in the case of finance and lending companies that get the services of third party service providers.

Lending and finance companies tap third party firms to avoid liability on client harassment.

The SEC said that companies that violate the circular would be subject to fines and a possibility of having their certificate of authority suspended or revoked.

“Businesses like us should be focused on providing more options to our customers—in other words, improving financial inclusion. Now, if we want that to happen, we need to work on the stigma of getting loans, a huge part of which is connected to debt collection,” Romano said.

Moving forward, PFA said it would be conducting more projects in support of the new regulations concerning debt collection.

Romano said the PFA is also drafting a code of ethics on debt collection which would be for strict compliance by its members and their third party service providers.