The Securities and Exchange Commission (SEC) said it has imposed a moratorium on the registration of new online lending platforms (OLP) of financing and lending companies.
In a statement, the SEC said the moratorium takes effect on Friday, November 5.
The commission on November 2 issued SEC Memorandum Circular No. 10, Series of 2021, which provides for the Moratorium on New Online Lending Platforms, ahead of the release of 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 in the same statement.
“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 added.
The SEC said that OLPs that have been recorded prior to the moratorium, may continue to operate and be used for online lending or financing.
“The Commission will subject the existing OLPs to strict monitoring, audit and review to ensure their compliance with all applicable laws, rules, and regulations,” it added.
To date, the SEC has cancelled the licenses of 35 financing/lending companies due to various violations of applicable rules and regulations.
The commission also said that it has revoked the certificate of registration of a total of 2,081 lending companies for their failure to secure the requisite certificate of authority, pursuant to Republic Act No. 9474, or the Lending Company Regulation Act of 2007.
At least 58 online lending applications have likewise been ordered to cease operations for lack of authority to operate as a lending or financing company, the SEC said.