THE Securities and Exchange Commission (SEC) has issued cease-and-desist orders to six online lending companies that engage in the business without the necessary license from the regulator.
In an order issued March 22, the commission en banc directed PesoKwento, Pondo Cash, TBAG, Cash Sky, Loan Cash, and East Cash to immediately stop “engaging in, carrying out, promoting, and facilitating any lending activity or transaction until they have incorporated and secured the requisite authorization from the SEC for such activities.”
“The companies, their agents, representatives and promoters, as well as the owners and operators of their hosting sites, were further enjoined to cease from offering and advertising their lending business through the internet or any other media, and to remove all materials involving such,” the SEC added.
The commission reported that none of the groups were registered as a corporation, thus they did not secure a certificate of authority to operate as a lending or financing company.
Republic Act No. 9474, or the Lending Company Regulation Act of 2007 (LCRA), requires persons or entities operating as lending companies to register as corporations and to secure from the SEC the necessary authority to operate.
The SEC said it also received complaints from several borrowers regarding the online lending operators’ “unfair collection practices and acts of harassment, made in the form of threats to ruin their reputation and to cause physical harm to their persons and their families.”
“[T]he abusive collection practices, misrepresentations, and unreasonable terms and conditions perpetrated and imposed by the online lending operators, their agents and representatives are the very acts and practices that, as a matter of policy, the State seeks to prevent and penalize,” the commission added.
On March 19, the SEC announced that it would create a financing and lending division focused exclusively on the regulation and monitoring of such companies as part of its crackdown against illegal lending.
SEC Chairperson Emilio B. Aquino said that the commission would continue to intensify its crackdown on abusive lending companies following complaints from consumers about the collection practices of some firms, involving threatening or insulting borrowers.
The SEC has an online team that conducts regular sweeping operations, monitors all complaints, and goes through different social media platforms to check on possible abusive or illegal lending practices.
“To date, we revoked over 2,000 Certificates of Registration of lending companies that failed to secure their requisite Certificate of Authority, pursuant to LCRA. Our next step is to sustain this crackdown on unregistered and abusive collection practices of [online lending applications],” Mr. Aquino said in a report to the Department of Finance. — Luisa Maria Jacinta C. Jocson