The Securities and Exchange Commission is taking action to protect borrowers from the harassment and unethical practices of financing and lending companies in collecting debts.
The SEC issued a new directive on the debt collection practices of financing companies and lending companies in response to numerous complaints against them and their third-party service providers for using allegedly abusive, unethical and unfair means to collect debts.
The SEC listed a number of unfair collection practices that financing and lending companies are prohibited to employ in a bid to collect debts.
Among these are the use of threat or violence and other criminal means to harm the borrower, his reputation, or property, threats to take any action that cannot legally be taken and obscenities, and insults, or profane language. The unfair practices include the disclosure or publication of the borrower’s name and other personal information, except in certain cases.
The SEC also prohibits lending firms from threatening to communicate to any person the loan information and making contact at unreasonable or inconvenient hours.
The SEC plans to require financing and lending companies to disclose the full name or true identity of their their personnel handling the collection of accounts.
The circular also requires financing and lending companies to keep a borrower’s data strictly confidential, except when the borrower gives a written consent for the disclosure of such information, or upon the order of a court or any authorized government agency.
While lending firms can outsource the collection of debts, they will maintain the responsibility of complying with the circular. Jenniffer B. Austria
Lending companies found to have used abusive, unethical and unfair means to collect debts will be slapped with a fine of P25,000 for the first offense and 50,000 for the second one.
Financing companies, meanwhile, will be slapped with P50,000 for the first offense and P100,000 for the second one.
For the third offense, the SEC said it would suspend or revoke the license of the erring lending and financing firms.
The SEC has been going after loan sharks and other illegal lenders charging exorbitant rates to borrowers.
The regulator in 2017 suspended registration certification of 84 lending companies that were charging extremely high interest on loans.