SEC asks BSP to stop ‘predatory lending,’ set limit on interest, other charges by lenders

In a bid to stop what it said was “predatory lending,” the Securities and Exchange Commission (SEC) asked the Bangko Sentral ng Pilipinas (BSP) to put a limit on interest rates and other fees that money-lending companies could charge on consumer and pay day loans.

In an Oct. 8 letter to BSP Governor Benjamin E. Diokno, SEC Chair Emilio Aquino said the BSP’s policy-making body, Monetary Board, has the power to fix maximum interest rates, fees and other charges that lending and financing companies could impose.

The Lending Company Regulation Act of 2007 allows lending firms to loan money to borrowers at reasonable rates and charges.

The law, however, also provided that the Monetary Board, in consultation with the SEC and the industry, may set ceilings on interest rates as warranted by prevailing economic and social conditions.

In his letter, Aquino said lending and financing companies charge as much as 2.5 percent interest per day “on top of other fees and charges.”

“Predatory lending continues to be one of the major subjects of complaints that the commission receives from the public,” Aquino’s letter said.

The SEC, the letter added, “respectfully requests” the BSP to put a ceiling on interest rates, charges and other fees being collected by lenders.

It said the ceiling rates, though, would “not apply to the whole financial sector, but solely to consumer loans and pay day loans” that the lending and financing companies offer./TSB