Tech giant Google is adopting a new policy for online lending apps in the Philippines, in line with its discussions with the Securities and Exchange Commission (SEC) since May 2019, to address the proliferation of unregistered personal loan apps.
Effective May 11, Google will require developers with personal loan apps targeting users in the Philippines to submit a Personal Loan App Declaration, and submit necessary documentation before they could publish apps on Google Play Store.
In the declaration form, developers should state that they are registered with and duly licensed by the SEC to operate an online lending platform (OLP), or to perform lending-based crowdfunding activities, such as peer-to-peer lending, or to act as a crowdfunding intermediary.
Developers should also confirm that they are engaged in a lawful business activity and are undertaking the same in compliance with the applicable laws.
Personal loan apps operating in the Philippines without proper declaration and license attribution will be removed from the Play Store.
In the event where the submitted license, registration or declaration is no longer valid under the applicable laws, the developers are required to promptly remove the app from Google Play Store.
Republic Act 9474, or the Lending Company Regulation Act of 2007, requires persons or entities operating as lending companies to register as corporations and to secure from the SEC the necessary authority to operate.
Republic Act 8556, or the Financing Company Act of 1998, likewise requires financing companies to register with the SEC as corporations and to secure separately from the SEC an authority to operate as such.
Under SEC Memorandum Circular No. 19, Series of 2019, the SEC further requires financing and lending companies to register their OLPs as business names, as well as disclose their corporate names, SEC registration numbers, and certificate of authority numbers in their OLPs and advertisements.
In November 2021, however, the commission imposed a moratorium on new OLPs while it drafts guidelines on the registration and licensing of OLPs. Under Memorandum Circular No. 10, Series of 2021, only those registered as of November 2, 2021 may operate and be used for online lending or financing, subject to strict monitoring.
“We thank Google for supporting our efforts to combat illegal and abusive lending, and thereby preserve the financing and lending industry’s integrity, and provide Filipinos secure and accessible financing options,” SEC chairperson Emilio B. Aquino said.
“We are positive that the additional requirements, imposed by Google for developers of personal loan apps targeting users in the Philippines, will serve as another layer of protection for Filipino borrowers and deterrence against predatory lending.”
The Philippines is one of three countries where Google will implement the additional requirements for developers of personal loan apps, the other two being India and Indonesia.
To date, the Commission has revoked the Certificates of Registration of more than 2,000 lending and financing companies, which failed to secure their requisite CA, and canceled the CA of 37 financing and lending companies due to various violations of applicable rules and regulations.
In addition, the SEC has ordered 72 OLPs to cease operations for lack of authority to operate as a lending or financing company.
