The Securities and Exchange Commission (SEC) has released for public comment a revised set of draft rules that would lift the moratorium on the registration of online lending platforms (OLPs) while imposing higher capital requirements and tighter consumer protection measures on financing and lending companies.
The proposed memorandum circular, issued on June 9, seeks to strengthen regulatory oversight of the online lending industry and address complaints involving abusive collection practices and consumer protection violations.
Under the draft guidelines, new financing companies would be required to have a minimum paid-up capital of P15 million, while new lending companies would need at least P5 million.
Existing firms operating online lending platforms would also be subject to higher capital requirements depending on the number of platforms they manage.
Financing companies operating one OLP would need at least P20 million in paid-up capital, rising to P100 million for those operating five platforms. Lending companies would be required to maintain capital ranging from P10 million for one platform to P50 million for five platforms.
The SEC is also proposing to limit financing and lending companies to a maximum of five online lending platforms each, saying the cap would help ensure effective supervision, adequate governance, and manageable consumer risk exposure.
The draft rules would adopt a Single Certificate of Authority policy, under which each financing or lending company would receive one certificate covering its principal office, branch offices, and online lending platforms.
To strengthen consumer protection, the SEC proposes to prohibit lenders from disbursing loan proceeds without a borrower’s explicit and informed confirmation of the final loan terms.
The rules would also require collection communications to clearly identify the registered lending company and the specific online lending platform involved.
In addition, the SEC is seeking to increase penalties for violations of rules against unfair debt collection practices.
Under the proposal, lending and financing companies found violating SEC Memorandum Circular No. 18, Series of 2019, could face fines of P50,000 and P100,000, respectively, for a first offense.
For third and subsequent violations, penalties could reach as much as P1 million, along with possible suspension of operations or revocation of the company’s certificate of authority.
The proposed framework includes safeguards against abusive debt collection practices and aligns with existing provisions of the Truth in Lending Act, the Financial Products and Services Consumer Protection Act, and the Data Privacy Act.
The SEC is accepting comments and recommendations on the draft guidelines until June 15.
