The Securities and Exchange Commission (SEC) has ordered six online lending operators to stop conducting lending activities without the necessary license from the agency.
In an order issued March 22, the SEC directed PesoKwento, Pondo Cash, TBAG, Cash Sky, Loan Cash, and East Cash to immediately cease and desist from engaging in any lending activity until they have incorporated and secured the requisite authorization from the agency.
The SEC issued the order after finding that none of the groups were registered as a corporation. As such, they could not secure a Certificate of Authority to operate as a lending or financing company.
“[T]he Commission finds that the continued operation of the online lending operators constitutes a clear violation of, and should be penalized pursuant to the [LCRA] because the evidence presented by the [Enforcement and Investor Protection Department] shows that they are engaged in, or are carrying out a lending business without the required license from the Commission, not to mention the fact that they are not registered corporations,” the SEC said.
The regulatory body also received complaints from several borrowers regarding the online lending operators’ unfair collection practices and acts of harassment, made in the form of threats to ruin their reputation and to cause physical harm to their persons and their families.
“[T]he abusive collection practices, misrepresentations, and unreasonable terms and conditions perpetrated and imposed by the online lending operators, their agents and representatives are the very acts and practices that, as a matter of policy, the State seeks to prevent and penalize,” the commission noted.
As part of its crackdown against illegal lending, the SEC said it will establish a Financing and Lending Division that aims to focus exclusively on the regulation and monitoring of such companies.
This is in response to the instruction of Department of Finance (DOF) secretary Carlos G. Dominguez III for the SEC to intensify its crackdown against illegal and abusive lending, which are proliferating and “charging very high interest rates.”
SEC chairperson Emilio B. Aquino assured the DOF that the agency continues to intensify its crackdown on abusive lending companies following complaints from consumers about the collection practices of some firms, involving threatening or insulting borrowers.
The SEC said it has an online team that conducts regular sweeping operations, monitors all complaints, and goes through different social media platforms to check on possible abusive or illegal lending practices.
“To date, we revoked over 2,000 Certificates of Registration of lending companies that failed to secure their requisite Certificate of Authority, pursuant to LCRA. Our next step is to sustain this crackdown on unregistered and abusive collection practices of [online lending applications],” Aquino said in a report to the DOF.
So far, the SEC has ordered 72 online lending applications to cease operations for lack of authority to operate as a lending or financing company. It has likewise canceled the licenses of 37 financing or lending companies due to various violations of applicable rules and regulations.