SEC halts registration of new online lenders

The Securities and Exchange Commission (SEC) has halted the registration of new online lending platforms (OLPs) from finance and lending companies after it discovered that loopholes in an old ruling were being used to prey on unwitting victims .

The SEC ordered a moratorium on new online lending platforms (SEC Memorandum Circular 10, Series of 2021) on November 2, ahead of the release of new rules that will govern the licensing and registration of company PLOs financing and lending.

“We are currently developing new guidelines that will enable lending and finance companies to better meet the needs of borrowers and, at the same time, close the loopholes that give rise to abusive and predatory practices,” said the president of the SEC, Emilio B. Aquino.

“We have seen the emergence of fintech companies that engage in predatory lending, taking advantage of those in financial difficulty during the pandemic. The Commission will work to root out these abusive finance and lending companies that only put borrowers further into debt,” he said.

Online lenders that were registered with the SEC before the moratorium can continue to operate and be used for online lending or financing. The SEC said it would subject existing lenders to strict oversight, audit and review to ensure compliance with all applicable laws, rules and regulations.

To date, the SEC has revoked the licenses of 35 finance and loan companies due to various violations of its rules and regulations.

The certificate of registration of a total of 2,081 loan companies was also revoked by the SEC for their failure to obtain the required certificate of authority, pursuant to Republic Act 9474 or the regulation of loan companies.

Some 58 online lending apps have been ordered to cease operations for lack of authorization to operate as a lending or finance company.

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