The Securities and Exchange Commission (SEC) is proposing tougher rules for online lenders, including higher capital requirements, stricter consumer protection measures, and steeper penalties for abusive collection practices.

Released for a second round of public comment on 9 June, the SEC said Wednesday the draft guidelines would require financing and lending companies to maintain higher paid-up capital based on the number of online lending platforms (OLPs) they operate, while limiting ownership to a maximum of five platforms per company.

New financing and lending companies would need a minimum paid-up capital of P15 million and P5 million, respectively. 

For firms operating OLPs, the requirement rises with scale. Financing companies would need up to P100 million in paid-up capital for five platforms, while lending companies would need up to P50 million.

The SEC said the cap is intended to ensure effective supervision, adequate governance, and manageable consumer risk exposure. 

The proposal also adopts a Single Certificate of Authority policy covering a company's principal office, branches, and online lending platforms.

The draft rules further seek to strengthen borrower protections by prohibiting lenders from releasing loan proceeds without a borrower's explicit confirmation of final loan terms. 

Collection communications, whether made directly or through third-party providers, must also clearly identify the lending company or platform involved.

The SEC is likewise proposing stiffer penalties for violations of its rules against unfair debt collection practices. Lending and financing companies could face fines of up to P1 million, suspension of operations, or revocation of their certificate of authority for repeated offenses.

The proposed framework aligns with the Truth in Lending Act, the Financial Products and Services Consumer Protection Act, and the Data Privacy Act.

Comments on the draft guidelines may be submitted until 15 June.