SEC cracks down on illegal lenders

The Securities and Exchange Commission (SEC) has padlocked 836 companies engaged in illegal lending, escalating its crackdown on loan sharks that operate without the necessary license.

The SEC revoked on July 16 the registration of the latest batch of corporations and partnerships that registered as lending companies but failed to secure the required certificate of authority to operate as lending companies.

The corporate watchdog has now revoked the registration of 2,080 lending companies, while continuing to validate the authority of more corporations that engage in lending activities.

On the other hand, a total of 2,783 lending companies have obtained the required certificate of authority from the SEC to engage in the business.

“Lending companies could play an important role in realizing the aspiration of Filipinos for a comfortable life by providing them access to funds for unforeseen and emergency expenses, major purchases as well as investments in their future,” SEC chair Emilio Aquino said.

“To protect both the integrity of legitimate lending companies and the interests of borrowers, the Commission will remain relentless in going after informal lenders as well as those engaging in predatory, abusive and unfair lending practices,” he added.

Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation. It further provides that “no lending company shall conduct business unless granted an authority to operate by the SEC.”

Under Section 12 of the same law, any person who engages in the business of lending without valid authority to operate from the SEC may face a fine ranging from P10,000 to P50,000 or imprisonment of six months to 10 years, or both.

As part of its efforts to formalize small lending businesses in the country, the SEC earlier issued memorandum circular no. 18, Series of 2016, to streamline the documentary requirements for financing as well as lending companies.

Under the memorandum circular, the SEC no longer requires financing and lending companies to submit quarterly reports of issuers of exempt commercial paper, certification of the corporate secretary on the attendance of directors to board meetings and corporate governance scorecard.

The list of revoked and suspended lending companies is available on the SEC website.