SEC steps up campaign against illegal online lenders

The Securities and Exchange Commission (SEC) has issued a new warning against loan and finance companies that fail to register and disclose their online lending platforms (OLPs).

As it continues to weed out abusive PLO operators, the SEC said in a notice dated June 22 that it would revoke the licenses of all non-compliant entities.

In 2019, the SEC required all loan and finance companies to report their PLOs and register their trade names. They were also asked to display on their advertisements and PLOs their respective corporate names, SEC registration numbers and authority certificate numbers.

Lending and finance companies were also required to disclose interest rates and all other fees to their borrowers prior to the consummation of loan transactions, as required by the Truth in Lending Act or the Act of Republic No. 3765.

Under this law, loan and finance companies must include in their advertisements and PLOs a notice to potential borrowers to study the terms and conditions set out in the information statement before proceeding with the loan transaction. .

These entities are required to submit an affidavit listing all of their PLOs that existed prior to the issuance of SEC Memorandum Circular No. 19, Series of 2019, which required the registration and reporting of these platforms.

They must also report new PLOs no later than 10 days before starting to operate new platforms. “The registration and disclosure requirements allow for closer monitoring of online lending and funding activity and provide additional protection for borrowers against predatory lending,” the SEC said.

A total of 86 lending and finance companies have registered their online lending platforms with the SEC as of April 7, 2021. The list of authorized lenders is published on the SEC’s website.

So far, the SEC has penalized several companies for late filing of reports, while show cause letters have been sent to 33 lending and finance companies for operating unregistered PLOs.

The SEC can impose a fine of up to 1 million pesos on loan and finance companies that fail to continuously comply with SEC Memorandum Circular No. 19. Failure to comply may also result in their suspension for 60 days or the revocation of their authority certificates.

To date, the corporate watchdog has revoked the primary registration of a total of 2,081 loan companies for their failure to obtain the required certificate of authority under the Companies Regulation Act 2007 credit. INQ

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