THE Securities and Exchange Commission (SEC) has released draft rules that will lift the moratorium on the registration of online lending platforms (OLPs) but also impose higher capital requirements and stricter consumer protection standards.
The proposed rules aim to strengthen regulatory oversight of the lending sector amid growing concerns over abusive collection practices and consumer protection risks.
Under the draft memorandum circular, the SEC plans to impose a uniform minimum paid-up capital of P15 million for new financing companies and P5 million for new lending companies.
The regulator is also proposing limits on the number of online lending platforms that financing and lending companies may operate, capping ownership at five platforms to ensure effective supervision and governance.
For companies operating OLPs, the SEC is seeking higher capitalization thresholds. Financing companies will be required to maintain at least P20 million in paid-up capital for one platform, rising to P100 million for five platforms.
Lending companies will need a minimum of P10 million for one platform and up to P50 million for five platforms.
The draft rules also adopt a Single Certificate of Authority policy under which financing and lending companies would receive one certificate covering their principal office, branch offices and online lending platforms.
Among the safeguards, meanwhile, financing and lending companies will be prohibited from releasing loan proceeds without a borrower's explicit confirmation of the final loan terms.
The SEC is likewise seeking tougher penalties for violations of rules against unfair debt collection practices. Proposed fines range from P50,000 to P100,000 for first offenses, while repeated violations could result in penalties of up to P1 million, suspension of operations or revocation of a company's certificate of authority.
The proposed framework aligns with the Truth in Lending Act, the Financial Products and Services Consumer Protection Act, and the Data Privacy Act.
The SEC has invited industry participants and the public to submit comments and recommendations on the draft guidelines until June 15.
