THE Securities and Exchange Commission (SEC) has stopped the registration of new online lending platforms (OLPs) of financing and lending companies after discovering loopholes in an old ruling are being used to prey on unwitting victims.
The SEC ordered a moratorium on new online lending platforms (SEC Memorandum Circular 10, Series of 2021) last November 2, ahead of the release of new rules that will govern the licensing and registration of OLPs of financing and lending companies.
“We are currently crafting new guidelines that will allow lending and financing companies to better address the needs of borrowers and, at the same time, plug loopholes that give rise to abusive and predatory practices,” SEC chairman Emilio B. Aquino said.
“We have seen the emergence of financial technology companies that engage in predatory lending, taking advantage of those struggling financially during the pandemic. The Commission will work toward stamping out these abusive financing and lending companies that do nothing but bury borrowers in even more debt,” he said.
The online lenders that have been recorded by the SEC prior to the moratorium may continue to operate and be used for online lending or financing. The SEC said it will subject the existing lenders to strict monitoring, audit and review to ensure their compliance with all applicable laws, rules and regulations.
To date, the SEC has cancelled the licenses of 35 financing and lending companies due to various violations of its rules and regulations.
The certificate of registration of a total of 2,081 lending companies have also been revoked by the SEC for their failure to secure the requisite certificate of authority, pursuant to Republic Act 9474, or the Lending Company Regulation Act of 2007.
Some 58 online lending applications have been ordered to cease operations for lack of authority to operate as a lending or financing company.
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