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SEC eyes ceiling on interest rates, fees imposed by lending firms

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ABS-CBN News

MANILA - The Securities and Exchange Commission said on Thursday it released the draft for a memorandum circular that aims to cap interest rates and fees imposed by lending companies, financing firms and their online lending platforms (OLPs). The guideline, released on Jan. 27 for public comment, will operationalize Bangko Sentral ng Pilipinas&#x27; Circular No. 1133 Series of 2021 which prescribes the maximum interest rates and other fees lending and financing companies and their OLPs, the SEC said.Based on the BSP&#x27;s circular, the fixed maximum nominal interest rate is at 6 percent per month or about 0.2 percent a day, and the effective interest rate (EIR) at 15 percent per month for covered loans which are unsecured, general-purposes loans that do not exceed P10,000 and with a loan tenor of up to 4 months.The SEC said the EIR includes the nominal interest rate along with other applicable fees and charges such as processing fees, service fees, notarial fees, handling fees and verification fees, among others, but excluding penalties for late and non-payments. In addition, lending firms may only impose up to 5 percent per month for late payment on outstanding scheduled amounts due.Based on the draft, a total cost cap of 100 percent of the total borrowed amount will also be imposed, applying to all interest, other fees and penalties regardless of the time the loan has been outstanding.&quot;Under the draft SEC memorandum circular, the cap on interest rates and other fees will apply to covered loans which lending and financing companies will offer once the proposed rules take effect,&quot; it said.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/11/05/21/sec-issues-moratorium-on-new-online-lending-apps">SEC issues moratorium on new online lending apps in bid to curb &#x27;abusive financing&#x27;</a></li></ul>The SEC said it has 60 business days from Jan. 3, 2022, when the BSP circular took effect, to promulgate the rules and regulations on the cap on interest rate and other fees imposed by lending and financing companies, and their OLPs.Lending firms who failed to comply once the measure becomes effective will be subject to penalties worth P25,000 and P50,000 for the first and second offense, respectively, the SEC said. Meanwhile, financing companies will be penalized with P50,000 for the first offense and P100,000 for the second offense, it added.The third offense for both categories can be up to P1 million, suspension of their financing and lending activities to 60 days or the revocation of their Certificates of Authority to Operate as a Financing/Lending companies.Part of the measure is the submission of an impact evaluation of the lending firms to the SEC every start of the year, which will be turned over to the BSP.Several lending firms and online platforms have been imposing &quot;exorbitant&quot; interest rates, fees and charges &quot;causing Filipinos to fall into debt trap,&quot; the SEC said.Meanwhile, the BSP had also earlier capped the interest rates imposed by credit card companies.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/11/26/21/bsp-keeps-credit-card-interest-rate-at-max-2-pctmonth">Bangko Sentral keeps credit card interest rate at maximum 2 pct per month</a></li></ul><div>RELATED VIDEO:</div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1779131" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

The SEC is aiming to cap interest rates and fees imposed by lending companies, financing firms and their online lending platforms. 