SEC suspends 84 illegal lenders

In support of Pres. Rodrigo Duterte’s crackdown against usurious lending, the Securities and Exchange Commission has suspended the license of 84 lending companies which were conducting lending operations without authority.

The 84 lending companies have failed to obtain a secondary license, or a certificate of authority, to operate as a lending company required under Republic Act No. 9474 or the Lending Company Regulation Act of 2007.

Earlier, SEC sent out more than 300 show-cause letters twice to every registered company engaged in lending which did not possess any license to operate as such. The show cause letters required the companies to explain why their certificates of registration (as a corporation) should not be suspended in view of the failure to secure the certificate. Out of the 300 letters, 84 were returned to sender.

As such, the SEC suspended the primary licenses of these 84 companies for 60 days. If they still do not respond within the suspension period, proceedings for revocation of their certificates of registration will immediately ensue, the SEC said.

Section 3 of R.A. 9474 defines a lending company as a “corporation engaged in granting loans from its own capital funds or from funds sourced from not more than 19 persons.” The definition excludes banking institutions, investment houses, savings and loan associations, financing companies, pawnshops, insurance companies, cooperatives and other credit institutions which are already regulated by law.

The law also states that no lending company shall conduct business unless granted an authority to operate by the SEC.

SEC director Justina Callangan, of the SEC’s Corporate Governance and Finance Department – which is tasked to regulate lending companies – noted that R.A. 9474 had been approved in 2007 and had taken effect in 2008. By this time, she stressed that all persons and entities engaged in lending activity should have secured their corresponding certificates of authority.

Callangan noted that these entities had been given more than sufficient time to comply with the law, hence, their continued noncompliance warranted their suspension.

“The Commission is one with the President in adopting a tough stance against illegal lending that is why it is pursuing with much vigor all those engaged in it”, Callangan added.

Aside from suspension, a fine of not less P10,000 or imprisonment of not less than six months but not more than 10 years or both, await those who violate the law.

The SEC’s list of the suspended illegal lenders is posted below.