Deluged with complaints from harassed borrowers, the Securities and Exchange Commission (SEC) is cracking down on unethical practices employed by financing and lending companies in collecting debts.
In a notice issued May 20, the SEC released for public comment a draft memorandum circular on the prohibition on unfair debt collection practices of financing companies and lending companies.
The SEC eyes penalties ranging from P25,000, in the case of violating lending companies, and P50,000, for erring financing companies, to suspension or revocation of license.
The SEC cited “numerous” complaints against financing and lending companies, and their third-party service providers allegedly harassing borrowers and employing abusive, unethical and unfair means to collect debts.
“Financing and lending companies have the right to collect amounts due them, but they can exercise such right only through reasonable and legally permissible means,” SEC chair Emilio Aquino said on Thursday.
Under the draft memorandum circular, the following are deemed unfair collection practices:
•Use of threat or violence and other criminal means to harm the borrower, his/her reputation, or his/her property.
•Use of threats to take any action that cannot legally be taken.
• Use of obscenities, insults, or profane language, which abuse the borrower and/or amount to a criminal act or offense under applicable laws.
•Disclosure or publication of the borrower’s name and other personal information, except in certain cases.
•Communicating or threatening to communicate to any person loan information, which is known or which should be known to be false, including the failure to communicate that the debt is being disputed, except in certain cases.
•Use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a borrower
•Making contact at unreasonable/inconvenient times or hours.