SEC push opens doors for digital loans

The Securities and Exchange Commission (SEC) is set to lift the ban on new online lending platforms (OLPs) to expand credit access for Filipino borrowers while imposing stronger safeguards against abusive lending practices.

Citing a draft memorandum circular released for public comment, the regulator said Friday that the rules would allow new OLP registrations under stricter prudential, disclosure, and market conduct standards.

The public may submit comments until 25 March.

“The proposed lifting of the moratorium recognizes the need to promote responsible innovation, stimulate economic activity among FCs and LCs, and ensure that the operation of OLPs is aligned with consumer protection, market integrity, prudential objectives, financial inclusion, ease of market access, and the global trend toward digitalization,” the SEC said.

Under the new rules, financing and lending companies (FLCs) must meet higher capital requirements depending on the number of OLPs they operate, with a maximum of 10 platforms allowed to limit systemic risk. Existing companies have three years to comply.

The draft guidelines also adopt a Single Certificate of Authority policy and shift to an asset-based licensing fee, while imposing strict consumer protection measures. 

FLCs are barred from scraping personal data, using automated collection threats, or outsourcing core lending functions. OLPs must register with the Credit Information Corporation and use credit data before approving loans.

“These safeguards are in line with provisions of the Truth in Lending Act, the Financial Products and Services Consumer Protection Act, and the Data Privacy Act,” the SEC said.