Tougher rules ahead for online lenders – DOF

MANILA, Philippines — The Department of Finance (DOF) has called for stronger measures to protect Filipinos from abusive lending practices, particularly from online platforms that charge excessive interest rates and trap borrowers in debt.

In a move to tighten the regulation of lending firms, Finance Secretary Ralph Recto said they are pushing for the imposition of stricter measures to have stronger safeguards for Filipinos amid the rise of online lending platforms.

“We need to further strengthen protections for our fellow Filipinos, especially as online lending platforms continue to increase, where people often fall victim to extremely high interest rates and end up buried in debt,” Recto said.

Last September, the Presidential Anti-Organized Crime Commission (PAOCC) said that around 300 formal cases had been filed against various online lending applications found to be engaging in abusive or predatory practices targeting borrowers.

The crackdown on abusive online lending applications by PAOCC began in June as part of its effort to track operators who have caused financial, psychological and reputational harm, after it received 13,000 complaints in April and May alone.

On orders of the DOF, the Securities and Exchange Commission (SEC) has drafted a memorandum circular that will impose limits on the interest rates and fees charged by lending and financing companies.

Under the proposed regulations, the ceiling on interest rates and other applicable fees would specifically apply to unsecured general-purpose loans, with a maximum amount of P20,000, covering short-term borrowings with repayment periods of up to six months.

Penalties for late payment or nonpayment would be capped at five percent per month based on the outstanding balance. Additionally, the SEC plans to limit the total amount of charges to ensure they do not exceed the original loan principal.

Lending and financing firms that violate the prescribed interest rate caps would be fined between P25,000 and P100,000 for the first and second offenses, according to the finance department.

Heavier penalties may also be imposed on erring companies, including the possible suspension of their operations or the outright revocation of their business permits for noncompliance with the regulations.

The SEC has invited the public to review and provide feedback on the proposed guidelines, allowing stakeholders and concerned citizens to submit their comments and suggestions until Nov. 14.

Tougher rules ahead  for online lenders – DOF

Beech

MANILA, Philippines — The Department of Finance (DOF) has called for stronger measures to protect Filipinos from abusive lending practices, particularly from online platforms that charge excessive interest rates and trap borrowers in debt.

In a move to tighten the regulation of lending firms, Finance Secretary Ralph Recto said they are pushing for the imposition of stricter measures to have stronger safeguards for Filipinos amid the rise of online lending platforms.

“We need to further strengthen protections for our fellow Filipinos, especially as online lending platforms continue to increase, where people often fall victim to extremely high interest rates and end up buried in debt,” Recto said.

Last September, the Presidential Anti-Organized Crime Commission (PAOCC) said that around 300 formal cases had been filed against various online lending applications found to be engaging in abusive or predatory practices targeting borrowers.

The crackdown on abusive online lending applications by PAOCC began in June as part of its effort to track operators who have caused financial, psychological and reputational harm, after it received 13,000 complaints in April and May alone.

On orders of the DOF, the Securities and Exchange Commission (SEC) has drafted a memorandum circular that will impose limits on the interest rates and fees charged by lending and financing companies.

Under the proposed regulations, the ceiling on interest rates and other applicable fees would specifically apply to unsecured general-purpose loans, with a maximum amount of P20,000, covering short-term borrowings with repayment periods of up to six months.

Penalties for late payment or nonpayment would be capped at five percent per month based on the outstanding balance. Additionally, the SEC plans to limit the total amount of charges to ensure they do not exceed the original loan principal.

Lending and financing firms that violate the prescribed interest rate caps would be fined between P25,000 and P100,000 for the first and second offenses, according to the finance department.

Heavier penalties may also be imposed on erring companies, including the possible suspension of their operations or the outright revocation of their business permits for noncompliance with the regulations.

The SEC has invited the public to review and provide feedback on the proposed guidelines, allowing stakeholders and concerned citizens to submit their comments and suggestions until Nov. 14.