SEC suspends registration of online lending platforms
On November 2, the Securities and Exchange Commission (SEC) released Memorandum Circular 10, Series of 2021, imposing a moratorium on registrations of new online lending platforms (OLP). As of now, only loan and finance companies registered with PLOs as of November 2, 2021 can operate. The moratorium also covers the registration of new PLOs by existing loan and finance companies.
The list of companies registered with PLOs in accordance with Information Circular 19, Series of 2019 (MC 19), which provides disclosure requirements on finance company and loan company advertising and lending platform reporting online, is attached to the circular which has just been published. The moratorium will remain in effect until it is formally lifted by the SEC.
Section 3 of MC 19 requires loan and finance companies to submit to the Corporate Governance and Finance Department of the SEC an Affidavit of Compliance (SEC Form 1 – Existing Online Lending Platforms) containing a report of all existing PLOs within 10 days of the entry into force of the circular. PLOs that are to be developed, operated, used or modified must also be reported through an Affidavit of Compliance (Form SEC 2 – Existing Online Lending Platforms) no later than 10 days before the start of operations of said PLOs. The forms are also attached to MC 19.
The moratorium is the SEC’s response to numerous complaints about alleged violations by PLOs of existing regulations. In the meantime, he will closely monitor and evaluate the operations of existing PLOs so as to promote lending and financing activities and allow the industry to thrive and develop while minimizing any risk associated with or inherent in lending. online loan operation to ensure consumer protection. The commission has seen the emergence of financial technology companies that engage in predatory practices to the detriment of borrowers.
The SEC is also in the process of drafting the PLO Registration and Licensing Guidelines for the purpose of prescribing documentary requirements and qualifications for loan and finance companies relating to the operation of their PLOs. The guidelines aim to enable these businesses to better meet the needs of borrowers and, at the same time, fill in the gaps that give rise to abusive and predatory practices.
PLOs that were registered with the SEC before the moratorium can continue to operate and be used for loans or funding online. The commission will subject existing PLOs to strict monitoring, audit and review to ensure compliance with all applicable laws, rules and regulations.
As of this writing, the commission has canceled the licenses of 35 loan and finance companies for violation of the rules. The registration certificates of 2,081 companies were also revoked for failure to obtain a certificate of authority under the Loan Company Regulation Act 2007. or finance company.
For an updated list of registered PLOs, visit the SEC website via the following link: https://www.sec.gov.ph/lending-companies-and-financing-companies-2/list-of- recorded-online-lending-platforms /.
Kelvin Lester K. Lee is Commissioner of the Securities and Exchange Commission. The views and opinions expressed here are hers. You can send your comments and questions to [emailÂ protected]