The Securities and Exchange Commission (SEC) has revoked the Certificate of Authority (CA) of Familyhan Credit Corporation to operate as a lending company after it engaged in unfair debt collection practices.
In an order dated April 13, the SEC found Familyhan liable for three violations of SEC Memorandum Circular No. 18, Series of 2019(SEC MC 18), which provides for the Prohibition on Unfair Debt Collection Practices of Financing Companies and Lending Companies.
Familyhan violated the prohibition on unfair debt collection practices when it contacted persons in the debtor’s contact list other than those named as guarantors or co-makers of the loan agreement, according to the SEC.
“Notwithstanding the borrower’s consent, contacting the persons in the borrower’s contact list other than those who were named as guarantors or co-makers shall also constitute unfair debt collection practice,” the SEC explained.
Whether or not contacting third parties in the borrower’s contact list was standard operating procedure for Familyhan prior to the issuance of SEC MC 18, the SEC noted that the company should have changed its collection practices the moment such was prohibited by the memorandum circular.
SEC MC 18 took effect on September 8, 2019, as part of the agency’s response to several complaints for unreasonable, abusive, and unfair practices that lending and financing companies employed to collect debt from borrowers.
“Enough time has been given to Respondent to adjust its collections procedure to conform with SEC MC18,” the SEC said. “This violation cannot, therefore, be overlooked.”
So far, 58 online lending applications have been ordered by the SEC to cease operations for lack of authority to operate as a lending or financing company.
