THE Securities and Exchange Commission (SEC) announced Friday, November 5, 2021, that it had imposed a moratorium on the registration of new online lending platforms (OLPs) of financing and lending companies, effective immediately.
SEC Memorandum Circular 10, Series of 2021, issued on November 2, orders the moratorium.
The circular describes OLPs as a type of internet finance that facilitates online lending operations to meet the financial needs of individuals and/or small and medium enterprises.
It cites the “numerous complaints relating to alleged violations by online lending platforms of existing regulations on the operation of, and the provision of lending and financing services” that the SEC had received as reason for the moratorium.
The moratorium also comes as the commission prepares to release new rules that will govern the licensing and registration of the 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 Chairperson Emilio 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,” Aquino said.
OLPs recorded by the SEC prior to the moratorium, may continue to operate and be used for online lending or financing. A list of such OLPs, numbering 101, appears on the SEC’s website.
To date, the SEC has canceled the licenses of 35 financing/lending companies due to various violations of applicable rules and regulations.
The certificate of registration of 2,081 lending companies have also been revoked by the SEC for their failure to secure the requisite certificate of authority, pursuant to Republic Act 9474, or the Lending Company Regulation Act of 2007.
Moreover, 58 online lending applications have been ordered to cease operations for lack of authority to operate as a lending or financing company.
The SEC asks the public to check if the lending or financing company they are dealing with is licensed by going through the list of such companies in the SEC website. (With PR)